The divide-and-conquer and employer/employee models of discrimination: neoclassical competition as a familial defect

This article is an examination of the similarities between Michael Reich’s divide-and-conquer model of discrimination and the Becker-Arrow taste model of discrimination. It shows that Reich’s model of discrimination is analytically identical to Arrow’s employer discrimination model when employer utility is a function of total profits and the racial employment ratio. It also shows that the Becker-Arrow distinction between employer and employee discrimination is invalid. Finally, the author argues that neoclassical competition is the major defect of both models. After discussing the implications of these results the article points to new directions in the literature on the economics of discrimination.