Preemptive mergers in a vertically differentiated unionized oligopoly Articles uri icon

authors

  • MESA SANCHEZ, FRANCISCO DE BORJA

publication date

  • July 2016

International Standard Serial Number (ISSN)

  • 1463-6786

Electronic International Standard Serial Number (EISSN)

  • 1467-9957

abstract

  • In the context of an international unionized oligopoly with vertical differentiation, the pattern of mergers is investigated. We show that mergers between firms producing the same-quality good lead wages to
    the reservation level, as well as maximize industry profits. However, it
    turns out that most of the market structure equilibria are shaped by
    mergers between producers of differentiated and homogeneous goods.
    This is so because mergers increase the market share of participating
    firms at the expense of that of the outsiders, leading to a scenario of
    preemptive mergers, where the main driving force can be to preempt
    rival mergers...