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Consumer Discrimination, Duopoly, and Black Firm Entry: The Welfare Effect of Subsidies

By Gregory N. Price

Abstract

Consumer discrimination, to the extent that it discourages the entry of Black-owned firms may be welfare reducing, as market output is lower than otherwise. This paper offers a simple model of duopoly in which conditions are derived for which a profit subsidy to Black-owned firms increases, decreases, or has no effect on social welfare.

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