Multimarket coopetition: How the interplay of competition and cooperation affects entry into shared markets

This study sheds light on how coopetition among rival firms that meet in multiple markets affects their competitive behavior in terms of entry into markets with rival incumbents. Specifically, we develop theoretical arguments on how the probability of a firm entering into shared markets is shaped by the complex interplay among the intensities of simultaneous competition and cooperation. We test our ideas using longitudinal data covering 38,184 firm-market-year observations from the airline industry in Europe. In line with our theoretical arguments, we find that when the intensity of cooperation is low, the link between multimarket competition and market entry follows an inverted U. However, an increasing intensity of cooperation between multimarket firms attenuates this relationship. Specifically, the intensity of cooperation weakens the positive link between multimarket competition and market entry when rivals share only a few markets and also weakens the negative relationship between competition and market entry in situations of high market overlap. We discuss the implications of these findings for the literature on coopetition and beyond and highlight their practical implications.