For Your Data Maverick Theory Inward Mergers

Maverick Theory

• Maverick theory explains why a item merge harms competition.
• The theatre that stops when prices are raised (e.g. inwards the iv corner gas-station example) is the maverick (this implies that the firms convey already solved their cartel problems).

Mavericks be for many reasons:

• Selling complementary services
• Relative excess capacity
• Lower average cost

If 2 firms merge that doesn't postulate the maverick, it shouldn't modify the price, unless it increases the might of the merged theatre to punish the maverick, simply if the maverick merges it volition presumably increment the maverick’s willingness to increment prices.

Mavericks are non the favored theory inwards mergers. The predominant theory is that of Judge Posner inwards Hospital Corp. Nonetheless, FTC v. Arch Coal, Inc. (D.D.C. 2004) acknowledged that a high-cost coal producer could non convey restricted increased prices inwards the manufacture in addition to denied the FTC’s asking for a preliminary injunction denying the acquisition.

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