Resource title

International competition, slim firms and wage inequality

Resource image

image for OpenScout resource :: International competition, slim firms and wage inequality

Resource description

A country with Cournot competition and free entry experiences an increase of its market size either due to economic growth or international integration of goods markets. The implied increase in competition leads to shrinking mark-ups and forces firms to reduce overhead costs relative to output. This implies a reallocation at the aggregate level from administrative to productive activities. Relative factor rewards change and wage inequality increases. The factor losing in relative terms can even lose in real terms. From a quantitative perspective, international competition is shown to be the more plausible cause of rising wage inequality.

Resource author

Klaus Waelde, Pia Weiss

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/18892

Resource license

Adapt according to the presented license agreement and reference the original author.