Exit from Two Declining Markets with Technological Complementarities1

We study the exit behavior of a firm in multiple declining markets with an extension of Ghemawat and Nalebuff (1985) to a multimarket environment. We find that the multimarket firms pool their commitment of staying in individual markets when there are technological complementarities between markets, and thereby, may change the credibility of the threat of staying in the war of attrition. The larger diversified firm could successfully force the smaller rival to exit first. Accordingly, the endogenous choice of multiple-exit timing has a strategic effect. We also discuss takeover incentive and collusion possibility in the multimarket exit games.