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

Kjell Lommerud (), Frode Meland () and Odd Rune Straume
Additional contact information
Frode Meland: Department of Economics, University of Bergen, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway, http://www.uib.no/personer/Frode.Meland

No 02/08, Working Papers in Economics from University of Bergen, Department of Economics

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 ?ight in the sense that a domestic ?rm can physically move its production out of the country. Restrictive cross-border merger policies can then seriously back?re, 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)
Pages: 28 pages
Date: 2008-03-23
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Citations: View citations in EconPapers (5)

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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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Persistent link: https://EconPapers.repec.org/RePEc:hhs:bergec:2008_002

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