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Discussion Paper Details

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Title: Merger Profitability in Unionized Oligopoly

Author(s): Kjell Erik Lommerud, Lars Sørgard and Odd Rune Straume

Publication Date: March 2001

Keyword(s): Endogenous Wages, Merger Profitability and Trade Unions

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Lommerud, K, Sørgard, L and Straume, O. 2001. 'Merger Profitability in Unionized Oligopoly'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2738