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

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  • Felix Montag

Abstract

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.

Suggested Citation

  • Felix Montag, 2026. "Mergers, Foreign Competition, and Jobs: Evidence from the US Appliance Industry," American Economic Review, American Economic Association, vol. 116(6), pages 2085-2119, June.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:6:p:2085-2119
    DOI: 10.1257/aer.20230017
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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