Mergers and unionization: Roll together or clash?

This paper explores the interplay between mergers and unionism and disentangles their product market impacts by analyzing concurrent merger and unionization episodes in the U.S. airline industry. We find that unionization alone reduces service quality and increases airfare, while a concurrent merger mitigates the negative quality impact and lowers airfare. The interaction effects between mergers and unionization are non-monotonic and time-varying and may improve consumer surplus in the long run. Our theoretical framework accounts for the lengthy merger process and provides a potential explanation. Our findings present a novel perspective on reconciling previous merger studies and offer important policy implications.