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National versus international mergers in unionised oligopoly

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  • Lommerud, Kjell Erik

    ()
    (University of Bergen, Department of Economics)

  • Straume, Odd Rune

    ()
    (Institute for Research in Economics and Business Administration (SNF))

  • Sørgard, Lars

    ()
    (Norwegian School of Economics and Business Administration)

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.

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Bibliographic Info

Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 12/03.

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Length: 31 pages
Date of creation: 08 Jun 2003
Date of revision:
Handle: RePEc:hhs:bergec:2003_012

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Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
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Web page: http://www.uib.no/econ/en
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Keywords: Endogenous merger; Merger policy; Welfare; Trade unions;

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References

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