Is wage discrimination more likely in competitive or monopolistic markets?
Competitive firms that discriminate may have to pay higher wages than firms that do not discriminate. Since their costs are higher, they will have difficulty surviving in the long run. Monopolists might reduce their profits by discriminating, but they need not fear going out of business if consumers have no alternative supplier. Also, they can pass on a portion of their higher costs both short run and long run, whereas a competitive firm cannot compete at a higher price and so cannot pass on higher wages or higher costs due to lower productivity. As such, wage discrimination is more likely in monopolistic markets.
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