CAN INCOME EQUALITY INCREASE COMPETITIVENESS?

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.


Issue Date:
2003
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/14983
PURL Identifier:
http://purl.umn.edu/14983
Total Pages:
28
JEL Codes:
D83
Series Statement:
Discussion Paper 7.03




 Record created 2017-04-01, last modified 2018-01-22

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