Mergers, foreign competition, and jobs: Evidence from the U.S. appliance industry

Felix Montag

No 326, Working Papers from The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State

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
New Economics Papers: this item is included in nep-com, nep-ind and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cbscwp:326

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