International mergers and trade liberalisation : implications for unionised labour

• Autor(a) principal: Straume, Odd Rune
• Data de Publicação: 2003
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/1822/6852
• topic: International mergers; Union wages; Trade liberalisation

An international oligopoly model with unionised and non-unionised firms is constructed to make predictions about the pattern of international mergers. Applying the method of endogenous merger formation developed by Horn and Persson [International Journal of Industrial Organisation 19 (2001) 1213] we find that the equilibrium market structure is highly dependent on the level of trade costs. The model is further utilised to analyse the implications of trade liberalisation for unionised labour. A main finding is that, for sufficiently high levels of trade costs, unionised workers may benefit from a merger between non-unionised firms, whereas low levels of trade costs make unionised firms highly ‘vulnerable’ to an international merger, which could be detrimental to the union’s ability to capture oligopoly rents.