Mergers and capital flight in unionised oligopolies: Is there scope for a 'national champion' policy?

Kjell Lommerud (), Frode Meland and Odd Rune Straume

No 10/2008, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: Many policy makers seem to prefer domestic alternatives to cross-broder mergers. Can such sentiments make sense? We contruct a model where cross-border mergers drive down union-set wages, where domestic mergers have larger non-labour cost synergies than international ones, and where policy evaluators care more about workers than capital owners. Apparently, the stage is set for national champion policies to be sensible. However, we also introduce the possibility of capital flight in the sense that a domestic firm can physically move its production out of the country. Restrictive cross-border merger policies can then seriously backfire, since they do not necessarily bring about a domestic merger - but capital flight instead.

Keywords: Cross-border merger; national champions; greenfield FDI; trade unions (search for similar items in EconPapers)
JEL-codes: F16 F21 J51 L13 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Mergers and capital flight in unionised oligopolies: Is there scope for a "national champion" policy? (2011)
Working Paper: Mergers and capital flight in unionised oligopolies: Is there scope for a 'national champion' policy? (2008)
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