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

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  • Felix Montag

    (Tuck School at Dartmouth)

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.

Suggested Citation

  • Felix Montag, 2023. "Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry," Rationality and Competition Discussion Paper Series 413, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:413
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    References listed on IDEAS

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    3. Alonso Alfaro Urena & Isabela Manelici & Jose P. Vasquez, 2021. "The Effects of Multinationals on Workers: Evidence from Costa Rican Microdata," Working Papers 285, Princeton University, Department of Economics, Center for Economic Policy Studies..
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    More about this item

    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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