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Specialization, Matching Intensity and Income Inequality of Sellers

Eleftheriou, Konstantinos and Polemis, Michael (2016): Specialization, Matching Intensity and Income Inequality of Sellers.

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Abstract

We develop a simple model with heterogeneous agents and search frictions to study how increases in matching intensity between buyers and sellers determine the level of income inequality among sellers. Our findings indicate that a reduction in search frictions leads to higher inequality and induces buyers to purchase goods and services only from specialized sellers.

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