The Distributional Effect of Market Power and Its Implications for Inclusive Growth in Korea
Han, Minsoo | July 2019
Identifying the causes of rising income inequality has become one of the biggest socioeconomic topics in many developed and major emerging economies. The most plausible explanations among both policy makers and analysts have to date been dominated by the textbook story of globalization and skill-biased technical change. Until recently, only a few studies have pointed to the role played by market power and corporate rent-seeking in rising income inequality. In the absence of competition and effective regulation, market power leads to an increase in prices relative to marginal costs. These higher prices hurt consumers but benefit business owners, corporate managers, and executives, who are concentrated at the top of income distribution, by disproportionately shifting extra profits towards these top income earners.
CitationHan, Minsoo. 2019. The Distributional Effect of Market Power and Its Implications for Inclusive Growth in Korea. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/10943.
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