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

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.