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The Effects Of Market Power On Inequality

BY | October 14, 2017

By Sean F. Ennis, Pedro Gonzaga & Chris Pike Market power has generally not received much recognition as a potential source of inequality. This paper describes a mechanism by which…

By Sean F. Ennis, Pedro Gonzaga & Chris Pike

Market power has generally not received much recognition as a potential source of inequality. This paper describes a mechanism by which income inequality can be exacerbated by market power, and provides a characterization of the impact of market power on income of the top 10 percent of income earners and the bottom 90 percent. For an illustrative 10 percent mark-up from market power, across 12 countries, we model a decline of purchasing power of

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