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.
Autor Felix Montag (Tuck School of Business, Dartmouth College)
Felix Montag is an Assistant Professor in Economics at the Tuck School of Business at Dartmouth College, as well as an Affiliate Fellow at the George J. Stigler Center for the Study of the Economy and the State at the University of Chicago Booth School of Business. His primary field is industrial organization. Most of his work studies questions at the intersection with adjacent fields, such as public economics, international trade, or labor economics.
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