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Can Income Equality Increase Competitiveness?

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  • Fishman, Arthur
  • Simhon, Avi

Abstract

This paper explores the relationship between income distribution, prices, production efficiency and aggregate output in a decentralized search economy. We show that income distribution determines how competitive the market is, and thereby affects production efficiency and aggregate output. It is shown that it is generally possible to engineer a judicious transfer of income from high to low income individuals which simultaneously increases income equality, competitiveness, and aggregate output.

Suggested Citation

  • Fishman, Arthur & Simhon, Avi, 2003. "Can Income Equality Increase Competitiveness?," Discussion Papers 14983, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  • Handle: RePEc:ags:huaedp:14983
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    File URL: http://purl.umn.edu/14983
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    References listed on IDEAS

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    More about this item

    Keywords

    Search; Price Dispersion; Income Inequality; Consumer/Household Economics; D83;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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