Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68654
Authors: 
Zweimüller, Josef
Brunner, Johannes K.
Year of Publication: 
1996
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 32
Abstract: 
This paper studies the impact of income inequality on the level of innovative activities in a model where innovations result in quality improvements. The market for quality goods is characterized by a natural oligopoly with three types of consumers - rich, middle class and poor. In general, we find that for reasons of strategic price setting a more equal distribution of income is favourable for innovation incentives. This is consistent with empirical evidence suggesting that countries with a more equal distribution of income have grown faster.
Subjects: 
inequality
income distribution
heterogeneity
innovation
endogeneous growth
product quality
vertical product differentiation
JEL: 
O31
L15
L16
D43
H23
Document Type: 
Working Paper

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