Outdated browser

You are using an outdated browser. DNB.nl works best with:

Competition and Inequality

Working paper 689
Working Papers

Published: 23 June 2020

This paper links the debate on the decrease in competitiveness and business dynamism with that on rising inequality. We build a framework with entry, imperfect competition, heterogeneous households, and incomplete markets. Recent trends in markups, factors share, and business dynamism are explained through an increase in barriers to entry for new firms, which restrict competition. Those trends account for 11% to 22% of the increase in income inequality observed between 1989 and 2007 and for 10% of the increase in wealth inequality. Just 16% of the population experiences a welfare gain during the transition from a high to a low competition environment. These are either the wealthy, or agents with low productivity relative to their asset holdings.

Keywords: inequality; entry; oligopoly; markups; incomplete markets
JEL codes E2; L1

Working paper no. 689

689 - Competition and Inequality

Download 689 - Competition and Inequality

Discover related articles