Inequality: A hidden cost of market power

Ennis, Sean ORCID: https://orcid.org/0000-0001-6796-5788, Gonzaga, Pedro and Pike, Chris (2019) Inequality: A hidden cost of market power. Oxford Review of Economic Policy, 35 (3). pp. 518-549. ISSN 0266-903X

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Abstract

This paper explores the impact of competition on inequality by developing a new model to illustrate how higher profits from market power, and associated higher prices, could influence the distribution of wealth and income. We analyse data from eight OECD countries—Canada, France, Germany, Korea, Japan, Spain, the United Kingdom, and the United States. In an average country in the sample, market power increases the wealth of the richest 10 per cent by between 12 and 21 per cent for a range of reasonable assumptions about savings behaviour, while it reduces the income of the poorest 20 per cent by 11 per cent or more. The results contribute to the economic literature on the origins of inequality, suggesting that lack of competition may be one source of economic inequality.

Item Type:	Article
Uncontrolled Keywords:	inequality,income distribution,wealth distribution,market power,competition,sdg 10 - reduced inequalities ,/dk/atira/pure/sustainabledevelopmentgoals/reduced_inequalities
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
Depositing User:	LivePure Connector
Date Deposited:	17 Jul 2019 08:30
Last Modified:	22 Oct 2022 05:03
URI:	https://ueaeprints.uea.ac.uk/id/eprint/71759
DOI:	10.1093/oxrep/grz017

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