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I consider a market with two firms, a minority group of customers, and a bigoted (racist, ethnocentric, xenophobic, or sexist) majority group of customers. There exists a Nash equilibrium with full segregation in which a low-price firm serves only the minority and a high-price firm serves only...
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A central hypothesis about discrimination is that prejudice forces the stigmatized into low paying, undesirable jobs … emerge. By contrast in competitive free markets, exclusionary discrimination often occurs but does not reduce workers' pay … discrimination is misguided: exclusion does not necessarily imply disadvantage; a shortfall in pay does not necessarily imply that …
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