This paper explores the impact of competition on inequality by developing a new model to illustrate how higher profits from market power, and associated higher prices, could influence the distribution of wealth and income. It analyses data from eight OECD countries – Canada, France, Germany, Korea, Japan, Spain, the United Kingdom and the United States. The results contribute to the economic literature on the origins of inequality, suggesting that competition may help to reduce economic inequality.
Inequality: A Hidden Cost of Market Power
