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Mergers, Foreign Competition, and Jobs: Evidence from the US Appliance Industry

Felix Montag

NYU Stern School of Business and CEPR (email: )

Policy choices often create trade-offs between workers and consumers. I examine how foreign competition alters the consumer welfare and domestic employment effects of mergers. I construct a model incorporating consumer demand, endogenous product portfolios, and employment decisions. Applying the model to Whirlpool’s acquisition of Maytag in the appliance industry, I compare the observed merger to a counterfactual acquisition by a foreign buyer. Although Whirlpool’s acquisition decreased consumer welfare by $271 million annually, it preserved 797 domestic jobs. These jobs must therefore be valued at more than $344, 000 per year for the domestic employment benefits to offset the consumer harm. (JEL E24, F23, G34, J30, L13, L68, R23)

DOI

10.1257/aer.20230017

Volume

116 (6)

Pages

2085-2119

Language

en

Export

BibTeX

Sources

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