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Inequality in models with a competition for market shares

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  • Andreas Hefti
  • Julian Teichgräber

Abstract

This paper develops a framework to systematically study how changes in market conditions affect the equilibrium inequality between heterogeneous agents. By stating our setting as a "competition for market shares", we can derive inequality predictions for vastly different competition models. This approach allows us to identify a common structure, e.g., in monopolistic competition, perfect competition, or competition for prizes, that explains why these models deliver similar inequality predictions. We apply our results to problems from trade, competition theory, consumption inequality, political economics and marketing, and relate some of the predicted inequality patterns to empirical evidence.

Suggested Citation

  • Andreas Hefti & Julian Teichgräber, 2021. "Inequality in models with a competition for market shares," ECON - Working Papers 375, Department of Economics - University of Zurich.
    • Handle: RePEc:zur:econwp:375
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    File URL: https://www.zora.uzh.ch/id/eprint/195497/1/econwp375.pdf
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    References listed on IDEAS

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    Cited by:

    1. Andreas Hefti & Julia Lareida, 2021. "Competitive attention, Superstars and the Long Tail," ECON - Working Papers 383, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    Inequality analysis; market shares; power functions; monopolistic competition; perfect competition competition for prizes;
    All these keywords.

    JEL classification:

    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • D30 - Microeconomics - - Distribution - - - General
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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