Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71194
Authors: 
Pagel, Beatrice
Wey, Christian
Year of Publication: 
2013
Series/Report no.: 
DICE Discussion Paper 89
Abstract: 
We re-examine the common wisdom that cross-border mergers are the most effective merger strategy for firms facing powerful unions. In contrast, we obtain a domestic merger outcome whenever firms are sufficiently heterogeneous (in terms of productive efficiency and product differentiation). A domestic merger unfolds a wage-unifying effect which limits the union's ability to extract rents. When asymmetries among fims vanish, then cross-border mergers are the unique equilibrium. However, they may be either between symmetric or asymmetric firms. Social welfare is never higher under a domestic merger outcome than under a cross-border merger outcome.
Subjects: 
Unionization
International Oligopoly
Endogenous Mergers
Countervailing Power
JEL: 
D43
J51
L13
ISBN: 
978-3-86304-088-8
Document Type: 
Working Paper

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