Effects of Declining Competition: Rising Markups, Profit Shares, and Inequality
A long-term decrease in competition within goods and services markets is a primary driver for the observed rise in both average firm markups and the share of national income going to profits, a trend evident in the US since the 1980s. Within the wage-setting/price-setting (WS-PS) model, this decline in competition is represented by a downward shift of the price-setting curve. This shift leads to a new equilibrium that directly contributes to a rise in household income inequality by altering the distribution of income in favor of firm owners over workers.
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Ch.2 Unemployment, wages, and inequality: Supply-side policies and institutions - The Economy 2.0 Macroeconomics @ CORE Econ
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The Need to Increase Competition
Effects of Declining Competition: Rising Markups, Profit Shares, and Inequality
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Analyzing Economic Data for a Hypothetical Country
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Mechanism: How Low Labor Market Competition Affects Wages
Effects of Declining Competition: Rising Markups, Profit Shares, and Inequality
Firm's Markup and its Relation to Market Competition
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Match each economic scenario with its corresponding effect on the real wage curve that is determined by firms' profit-maximizing price-setting decisions.
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Effect of Low Product Market Competition on the Price-Setting Curve
Effect of Low Labor Market Competition on the Price-Setting Curve
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Learn After
Extent of Falling Competition's Contribution to Rising Inequality
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Analyzing Market Trends in Econland
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Figure 2.23: The Gini Coefficient for Market Income in the US (1913–2019)
Predicted Rise in Unemployment from Declining Competition