Working Paper: CEPR ID: DP4040
Authors: Kjell Erik Lommerud; Odd Rune Straume; Lars Sørgard
Abstract: We analyse how the presence of trade unions affects the pattern of mergers in an international oligopoly and the welfare implications thereof. We find that an international merger results in lower wages for all firms. A national merger results in higher wages, highest for the non-merging firms. Using a model of endogenous merger formation, we find that the equilibrium market structure, if it exists, always implies one or more international mergers. Unless products are close substitutes there are more mergers than socially preferred.
Keywords: endogenous merger; merger policy; trade unions; welfare
JEL Codes: J51; L13; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| International Merger (G34) | Lower Wages (J31) |
| National Merger (G34) | Higher Wages (J31) |
| International Merger (G34) | Lower Wage Demands (J31) |
| Close Substitutes (D41) | One International Merger (F29) |
| One International Merger (F29) | Lower Wages (J31) |
| Equilibrium Market Structure (D41) | More Mergers Than Socially Preferred (D71) |