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Unionization Structure And The Incentive For A Cross-Border Merger

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Listed:
  • MUKHERJEE , ARIJIT
  • ZHAO, LAIXUN

Abstract

This paper analyzes how domestic labour unions affect the incentive for a cross-border merger. We find it to crucially depend on the unionization structure (i.e., centralized or decentralized) and wage setting behavior (i.e., uniform or discriminatory). Under discriminatory wages, the incentive for a cross-border merger is higher under a centralized union. However, the opposite can be true under a uniform wage. Different from the literature, a higher product market concentration can make the workers better off under decentralized unions than under a centralized union. Counter intuitively, a centralized union may prefer a uniform wage than discriminatory wages if the latter wage setting behavior increases product market concentration.

Suggested Citation

  • Mukherjee , Arijit & Zhao, Laixun, 2016. "Unionization Structure And The Incentive For A Cross-Border Merger," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 51(1), pages 129-145.
    • Handle: RePEc:dse:indecr:0115
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    Cited by:

    1. Arijit Mukherjee, 2023. "Losses from cross-holdings in a duopoly with convex cost and strategic input price determination," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 81-91, April.

    More about this item

    Keywords

    Decentralized Union; Centralized Union; Cross-border Merger; FDI;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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