The observed correlation between rising corporate markups and a higher Gini coefficient in the US definitively proves that decreased market competition is the sole cause of increased income inequality.
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An economist observes the following simultaneous trends in a country's economy over two decades: a consistent increase in the average markup of prices over costs for firms, a rising share of national income going to profits rather than wages, and a growing Gini coefficient. Based on the economic hypothesis linking market structure to income distribution, what is the most likely explanation for the connection between these trends?
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The observed correlation between rising corporate markups and a higher Gini coefficient in the US definitively proves that decreased market competition is the sole cause of increased income inequality.