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Price competition, merger and welfare under firm-specific unions: on the role of unions' preference towards wages

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Listed:
  • Luciano Fanti
  • Nicola Meccheri

Abstract

This paper analyses the effects of a downstream merger in a differentiated duopoly under price competition and firm-specific unions. In contrast with the acquired wisdom, we show that a downstream merger may increase overall welfare when products are sufficienly substitutes and unions are sufficiently oriented towards wages.

Suggested Citation

  • Luciano Fanti & Nicola Meccheri, 2012. "Price competition, merger and welfare under firm-specific unions: on the role of unions' preference towards wages," Discussion Papers 2012/136, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2012/136
    Note: ISSN 2039-1854
    as

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    File URL: https://www.ec.unipi.it/documents/Ricerca/papers/2012-136.pdf
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    References listed on IDEAS

    as
    1. Kurt R. Brekke, 2004. "Competition or Coordination in Hospital Markets with Unionised Labour," International Journal of Health Economics and Management, Springer, vol. 4(1), pages 65-89, March.
    2. Symeonidis, George, 2010. "Downstream merger and welfare in a bilateral oligopoly," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 230-243, May.
    3. Office of Health Economics, 2007. "The Economics of Health Care," For School 001490, Office of Health Economics.
    4. John H. Pencavel, 1984. "The Tradeoff Between Wages and Employment in Trade Union Objectives," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(2), pages 215-231.
    5. 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.
    6. repec:bla:scandj:v:87:y:1985:i:2:p:197-225 is not listed on IDEAS
    7. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
    8. Petrakis, Emmanuel & Vlassis, Minas, 2000. "Endogenous scope of bargaining in a union-oligopoly model: when will firms and unions bargain over employment?," Labour Economics, Elsevier, vol. 7(3), pages 261-281, May.
    9. Dowrick, Steve & Spencer, Barbara J, 1994. "Union Attitudes to Labor-Saving Innovation: When Are Unions Luddites?," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 316-344, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    mergers; social welfare; price competition; plant-specific unions.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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