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Unionization Structure And The Incentive For A Cross-Border Merger

Arijit Mukherjee () and Laixun Zhao

Indian Economic Review, 2016, vol. 51, issue 1, 129-145

Abstract: This paper analyzes how domestic labour unions affect the incentive for a cross-border merger. We find it to crucially depend on the unionization structure (i.e., centralized or decentralized) and wage setting behavior (i.e., uniform or discriminatory). Under discriminatory wages, the incentive for a cross-border merger is higher under a centralized union. However, the opposite can be true under a uniform wage. Different from the literature, a higher product market concentration can make the workers better off under decentralized unions than under a centralized union. Counter intuitively, a centralized union may prefer a uniform wage than discriminatory wages if the latter wage setting behavior increases product market concentration.

Keywords: Decentralized Union; Centralized Union; Cross-border Merger; FDI (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2016
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Indian Economic Review is currently edited by Pami Dua (Editor) & Ram Singh (Associate Editor) and Sunil Kanwar

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