Question

If British and American pilots and their respective unions merge after their airlines merge, how would...

If British and American pilots and their respective unions merge after their airlines merge, how would the merger affect costs and income of the pilots?

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Answer #1

Mergers refer to coming together abd merging of two different firms which operate in the same market. Merging between 2 big firms creates a concentration of power or a situation of monopoly in the market. It curbs competition and strengthens the hold of the merging firms in the industry.

If two of the most important airline firms British airlines and American airlines decide to merge, it will create their dominance in the market. If the pilots in these firms belong to different unions, they will demand higher wages, as they know that the firm merger will help the company in economies of scale and thus lower costs. Also, they being the most important input for these firms to work, they will demand high wages, thereby increasing the firms' costs.

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