In the presence of inequality a status-driven utility function reconciles the conflict between income-based and nutrition-based measures of poverty. Moreover, it can explain why the poor tend to save less, an established empirical fact in the developing countries. The result is independent of...

In terms of a simple model we show that removal of tariff from a competing foreign brand is likely to expand the size of the domestic industry when income disparities exist. A tariff increases profits of the local monopolist but is capable of cutting down the size of the local industry. After...