Inequality in Models with a Competition for Market Shares

University of Zurich, Department of Economics, Working Paper No. 375, January 2021

74 Pages Posted: 19 Jan 2021

See all articles by Andreas Hefti

Andreas Hefti

University of Zurich - Department of Economics; Zurich University of Applied Sciences

Julian Teichgräber

University of Zurich

Date Written: January 4, 2021

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.

Keywords: Inequality analysis, market shares, power functions, monopolistic competition, perfect competition competition for prizes

JEL Classification: C65, D30, D41, E10, L11, M37

Suggested Citation

Hefti, Andreas M. and Teichgräber, Julian, Inequality in Models with a Competition for Market Shares (January 4, 2021). University of Zurich, Department of Economics, Working Paper No. 375, January 2021, Available at SSRN: https://ssrn.com/abstract=3762387 or http://dx.doi.org/10.2139/ssrn.3762387

Andreas M. Hefti (Contact Author)

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

Zurich University of Applied Sciences ( email )

Institut fuer Angewandte Medienwissenschaft
Zur Kesselschmiede 35
Winterthur, CH 8401
Switzerland

Julian Teichgräber

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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