Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry

Felix Montag
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Felix Montag: Tuck School at Dartmouth

No 378, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1,300 fewer domestic jobs lost. Jobs need to be worth above $220,000 annually for domestic employment effects to offset consumer harm.

JEL-codes: F61 L13 L40 (search for similar items in EconPapers)
Date: 2023-01-27
New Economics Papers: this item is included in nep-com, nep-ind and nep-int
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