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Merger Profitability in Unionized Oligopoly

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  • Sørgard, Lars
  • Lommerud, Kjell Erik

Abstract

We examine how a merger affects wages of unionized labour and, in turn, the profitability of a merger under Cournot competition in differentiated products. If unions are plant-specific, we find that a merger is more profitable than in a corresponding model with exogenous wages. In contrast to the received literature, we find that it can be more profitable to take part in a merger than to be an outsider. For firm-specific unions, on the other hand, results are reversed.

Suggested Citation

  • Sørgard, Lars & Lommerud, Kjell Erik, 2001. "Merger Profitability in Unionized Oligopoly," CEPR Discussion Papers 2738, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2738
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    10. Lommerud, Kjell Erik & Sorgard, Lars, 1997. "Merger and product range rivalry," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 21-42, November.
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    Citations

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    Cited by:

    1. Steffen Huck & Kai A. Konrad, 2004. "Merger Profitability and Trade Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 107-122, March.
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    3. Kjell Erik Lommerud & Odd Rune Straume & Lars Sørgard & Odd Rune Straume, 2002. "Downstream Merger with Oligopolistic Input Suppliers," CESifo Working Paper Series 733, CESifo.
    4. Thomas Giebe & Miyu Lee, 2020. "Competitors in merger control: Shall they be merely heard or also listened to?," European Journal of Law and Economics, Springer, vol. 49(3), pages 431-453, June.
    5. Straume, Odd Rune, 2003. "International mergers and trade liberalisation: implications for unionised labour," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 717-735, May.
    6. Lommerud, Kjell Erik & Straume, Odd Rune & Sorgard, Lars, 2005. "Downstream merger with upstream market power," European Economic Review, Elsevier, vol. 49(3), pages 717-743, April.
    7. Steffen Huck & Kai A. Konrad, 2003. "Strategic Trade Policy and Merger Profitability," CESifo Working Paper Series 948, CESifo.
    8. An Liu & Inge Noback, 2011. "Determinants of regional female labour market participation in the Netherlands," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(3), pages 641-658, December.

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    More about this item

    Keywords

    Merger profitability; Trade unions; Endogenous wages;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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