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Competition and Discrimination: a not so Obvious Relationship

Clémence Berson ()

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: Discrimination models have diffivulties to study discrimination without assuming that prejudiced firms are more productive and results lead to workers' segregation. In this article, the model uses oligopsony and heterogeneity of workers' preferences to obtain a persistent discrimination. Firms hire both thpes of workers and pay a lower wage to the workers discriminated against whatever their taste for discrimination. A single prejudiced firm leads to a substancial wage gap in all firms. Consequently, the existence of discrimination allows a non-zero profit for unprejudiced firms and they have also no incentives to push out prejudiced firms. Moreover, the wage gap is affected by firms' spread out as well as by the number of prejudiced firms in the market. Government policies decrease the impact of taste for discrimination on wages but governments are not interested in

Keywords: Discrimination; oligopsony; wage gap (search for similar items in EconPapers)
JEL-codes: J42 J71 L13 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011-01
New Economics Papers: this item is included in nep-bec, nep-cis and nep-lab
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ftp://mse.univ-paris1.fr/pub/mse/CES2011/11005.pdf (application/pdf)

Related works:
Working Paper: Competition and Discrimination: a not so Obvious Relationship (2011) Downloads
Working Paper: Competition and Discrimination: a not so Obvious Relationship (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:11005

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