Extent of Falling Competition's Contribution to Rising Inequality
While declining market competition is recognized as a factor contributing to the rise in household income inequality since the 1980s, the precise magnitude of this effect is not yet settled. Determining the extent to which falling competition is responsible for the observed increase in inequality is an important and actively debated question in economics.
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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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Extent of Falling Competition's Contribution to Rising Inequality
An economist observes that over the past 30 years in a particular country, the gap between the prices firms charge and their production costs has widened. During the same period, the portion of national income paid to workers has decreased, while the portion going to company owners has increased. Based on the relationship between market structure and income distribution, which of the following is the most likely underlying cause of these trends?
An economy experiences a broad decline in competitive pressures within its goods and services markets. Arrange the following events to show the logical sequence of how this change is expected to affect the distribution of income.
Analyzing Market Trends in Econland
The Link Between Market Structure and Income Inequality
Shift in Economic Power from Workers to Firm Owners
Figure 2.23: The Gini Coefficient for Market Income in the US (1913–2019)
Predicted Rise in Unemployment from Declining Competition