Self-employment rates and incomes differ significantly by race. We show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller. Equilibrium income distributions have two properties: mean black...

Explores racial differences in the propensity toward self-employment and income. The theoretical analysis assumes that white consumers prefer not to purchase goods from self-employed minority workers. This discrimination exists when there is personal contact between the consumers and the...

Self-employment rates and incomes differ significantly by race. We show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller. Equilibrium income distributions have two properties: mean black...