On the effects of income heterogeneity in monopolistically competitive markets”

Reference : On the effects of income heterogeneity in monopolistically competitive markets”


	Document type :	Scientific congresses, symposiums and conference proceedings : Unpublished conference
	Discipline(s) :	Business & economic sciences : International economics
	To cite this reference:	http://hdl.handle.net/10993/48994

Title :	On the effects of income heterogeneity in monopolistically competitive markets”
Language :	English
Author, co-author :	Picard, Pierre M [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) >]
	Kichko, Sergey [Higher School of Economics]
Publication date :	Aug-2021
Peer reviewed :	No
Audience :	International
Event name :	European Economic Association
Event date :	from 23 to 27 August 2021
Event organizer :	European Economic Association
Event place (city) :	Copenhagen
Keywords :	[en] Monopolistic competition ; nonhomothetic preferences ; income inequality,
Abstract :	[en] This paper studies the e¤ects of income heterogeneity on monopolistically competitive product markets and welfare in the context of non-homothetic preferences. When richer individuals expenditures are less sensitive to price change compared to poorer ones , a mean-preserving contraction of income distribution entices rms to charge higher prices, new rms enter and broaden product diversity. General equilibrium e¤ects have a negative impact on poorer individuals and, in speci c circumstances, on whole population. In open economies, lower income inequality in a country creates a price divergence between countries and decreases trade volumes and values. Those general equilibrium e¤ects are quantitatively non negligible.
Permalink :	http://hdl.handle.net/10993/48994

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