 Interlocking cross-ownership in a unionised duopoly: when social welfare benefits from “more collusion”Journal of Economics, 2016, vol. 119, issue 1, No 3, 47-63 Abstract: Abstract The present study analyses the effects of two-sided cross-ownership structures in a Cournot duopoly with firm-specific monopolistic unions. Since such mutual cross-participations imply a lower degree of competition, the conventional wisdom is that consumer surplus and social welfare, despite the increase in industry profits, are harmed. By contrast, when the labour market is unionised, we show the counterintuitive result that both consumer surplus and social welfare increase with the share of mutual cross-participation. Interestingly, this occurs not only when unions are wage-aggressive but even if they are fairly “risk-averse”. Therefore, a rather paradoxical conclusion—which may have anti-trust policy implications—is that the interlocking cross-ownership ensuring the highest profit (i.e. the “most” collusive mutual cross-participation) may be socially preferred when there are unions in oligopoly industries. Finally, it is shown that, even though details change, the results also hold qualitatively under differentiated products, price competition and triopoly. Keywords: Two-sided cross-ownership; Duopoly; Unions; Social Welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:119:y:2016:i:1:d:10.1007_s00712-016-0485-5 DOI: 10.1007/s00712-016-0485-5 Access Statistics for this article Journal of Economics is currently edited by Giacomo Corneo More articles in Journal of Economics from Springer |
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