Income distribution, market structure, and individual welfare

Tarasov, Alexander (2009): Income distribution, market structure, and individual welfare. In: The B.E. Journal of Theoretical Economics, Bd. 9, Nr. 1

Abstract

This paper explores how income distribution affects market structure, prices, and economic well-being of different consumer groups. I consider a general equilibrium model of monopolistic competition with free entry, heterogenous firms and consumers that share identical but non-homothetic preferences. The results in the paper suggest that poverty reduction might be of a greater importance than lowering income inequality, as lower income inequality does not necessarily lead to welfare gains of the poor. In particular, I show that higher income inequality may benefit the poor via a trickle-down effect operating through the entry of firms into the market.

• Dokumententyp: Zeitschriftenartikel
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Lehrstühle > Seminar für Internationale Wirtschaftsbeziehungen
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• Sprache: Englisch