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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.
Item Type: | Journal article |
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Faculties: | Economics Economics > Chairs > Chair of International Economics |
Subjects: | 300 Social sciences > 330 Economics |
Language: | English |
Item ID: | 19578 |
Date Deposited: | 15. Apr 2014, 08:52 |
Last Modified: | 04. Nov 2020, 13:01 |
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Income Distribution, Market Structure, and Individual Welfare. (deposited 15. Apr 2014, 08:52)
- Income distribution, market structure, and individual welfare. (deposited 15. Apr 2014, 08:52) [Currently Displayed]