INEQUALITY, MARKET STRUCTURE, AND GROWTH: A NEO-SCHUMPETERIAN PERSPECTIVE

 

Chol-Won Li

Brasenose College, Oxford

 

April 1996

 

Abstract

This paper aims to examine the relationships between inequality and growth, emphasising the role of a product market, its market structure and technological innovation. It is shown that widening inequality is harmful for growth in monopoly but beneficial in Bertrand duopoly, giving a V-shape-like relationship between growth and inequality. This also implies that growth rates are not necessarily higher in a concentrated market structure than in a less concentrated one.