possibility to successfully commit to its optimal strategy in a second market. The incumbent must
install a higher level of global capacity to successfully deter entry in all markets. If exogenous
or endogenous factors allow the incumbent to assign parts of its capacity to local markets, multi-
market production can be profitable, even under increasing returns to scale at the global level.
The results suggest that local investments can be regarded as market commitments, in order to
restrict or prevent competition in specific markets.
22
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