ABSTRACT
Conglomerate mergers raise unique antitrust issues which cannot be analyzed with traditional models of the theory of the firm. This thesis examined one of those issues—the hypothesis that conglomerate mergers reduce competition through the creation of mutual forbearance behavior. This hypothesis asserts that diversified firms will respect each other’s “spheres of influence” by adopting non-aggressive behavior in those markets for fear of retaliation in other markets important to them. This hypothesis thus implies that firm behavior in one market is conditioned by firm relationships in other markets.
