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Inequality, market power, and product diversity

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  • Foellmi, Reto
  • Zweimuller, Josef

Abstract

We analyze a macroeconomic model of monopolistic competition in which consumers earn unequal incomes. When preferences are non-homothetic, the distribution of income affects equilibrium mark-ups and equilibrium product diversity.
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  • Foellmi, Reto & Zweimuller, Josef, 2004. "Inequality, market power, and product diversity," Economics Letters, Elsevier, vol. 82(1), pages 139-145, January.
    • Handle: RePEc:eee:ecolet:v:82:y:2004:i:1:p:139-145
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    1. Osharin, Alexander & Thisse, Jacques-François & Ushchev, Philip & Verbus, Valery, 2014. "Monopolistic competition and income dispersion," Economics Letters, Elsevier, vol. 122(2), pages 348-352.
    2. Nico Voigtländer & Hans-Joachim Voth, 2006. "Why England? Demographic factors, structural change and physical capital accumulation during the Industrial Revolution," Journal of Economic Growth, Springer, vol. 11(4), pages 319-361, December.
    3. Parenti, Mathieu & Ushchev, Philip & Thisse, Jacques-François, 2017. "Toward a theory of monopolistic competition," Journal of Economic Theory, Elsevier, vol. 167(C), pages 86-115.
    4. Goncharenko, V. & Shapoval, A., 2018. "Impact of Demand Structure and Market Size on Unemployment, Income Inequality and Social Welfare," Journal of the New Economic Association, New Economic Association, vol. 37(1), pages 12-33.
    5. Berentsen Aleksander & Rocheteau Guillaume, 2003. "On the Friedman Rule in Search Models with Divisible Money," The B.E. Journal of Macroeconomics, De Gruyter, vol. 3(1), pages 1-21, December.
    6. Foellmi, Reto & Wuergler, Tobias & Zweimüller, Josef, 2014. "The macroeconomics of Model T," Journal of Economic Theory, Elsevier, vol. 153(C), pages 617-647.
    7. Foellmi, Reto & Oechslin, Manuel, 2010. "Market imperfections, wealth inequality, and the distribution of trade gains," Journal of International Economics, Elsevier, vol. 81(1), pages 15-25, May.
    8. Nico Voigtländer & Joachim Voth, 2005. "Why England? Demand, growth and inequality during the Industrial Revolution," Economics Working Papers 857, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2006.
    9. Tarasov Alexander, 2009. "Income Distribution, Market Structure, and Individual Welfare," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-39, December.
    10. Schweinberger, A.G. & Woodland, A.D., 2015. "Entrepreneurship and conflict generating product price changes," European Economic Review, Elsevier, vol. 78(C), pages 158-174.
    11. Bruno S. Frey & Alois Stutzer, "undated". "Direct Democracy: Designing a Living Constitution," IEW - Working Papers 167, Institute for Empirical Research in Economics - University of Zurich.
    12. Boucekkine, Raouf & Latzer, Hélène & Parenti, Mathieu, 2017. "Variable markups in the long-run: A generalization of preferences in growth models," Journal of Mathematical Economics, Elsevier, vol. 68(C), pages 80-86.
    13. Aleksander Berentsen & Esther Br�gger & Simon L�rtscher, "undated". "On Cheating and Whistle-Blowing," IEW - Working Papers 153, Institute for Empirical Research in Economics - University of Zurich.
    14. Reto Foellmi & Josef Zweimüller, 2010. "Mass versus Exclusive Goods, and Formal-Sector Employment," Diskussionsschriften dp1005, Universitaet Bern, Departement Volkswirtschaft.
    15. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    16. Castillo, Paul & Montoro, Carlos, 2015. "Distribución de Ingresos y Dolarización Endógena," Working Papers 2015-002, Banco Central de Reserva del Perú.
    17. Jing‐Lin Duanmu & Maoliang Bu & Russell Pittman, 2018. "Does market competition dampen environmental performance? Evidence from China," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 3006-3030, November.
    18. Enrico De Giorgi & Stefan Reimann, "undated". "The ?-Beauty Contest: Choosing Numbers, Thinking Intervals," IEW - Working Papers 183, Institute for Empirical Research in Economics - University of Zurich.
    19. Dieter Pennerstorfer & Nora Schindler & Christoph Weiss & Biliana Yontcheva, 2020. "Income Inequality and Product Variety: Empirical Evidence," Economics working papers 2020-17, Department of Economics, Johannes Kepler University Linz, Austria.
    20. Foellmi, Reto & Zweimüller, Josef, 2006. "Mass Consumption, Exclusion and Unemployment," CEPR Discussion Papers 5824, C.E.P.R. Discussion Papers.
    21. Wai Chiu Woo, 2016. "Quantity versus variety: Which aspect does status-seeking promote?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(2), pages 93-106, June.
    22. Zhifang Zhou & Lingyan Zhang & Li Lin & Huixiang Zeng & Xiaohong Chen, 2020. "Carbon risk management and corporate competitive advantages: “Differential promotion” or “cost hindrance”?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(4), pages 1764-1784, May.
    23. Corrado Benassi & Alessandra Chirco & Caterina Colombo, 2006. "Vertical Differentiation And The Distribution Of Income," Bulletin of Economic Research, Wiley Blackwell, vol. 58(4), pages 345-367, October.

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    More about this item

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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