Competitive markets tend to

Question

Quizplus · Accepted Answer

Competitive markets tend to reduce labour market discrimination because non-discriminating firms will employ cheaper labour, earn more profits, and drive discriminating firms out of the market. In a competitive market, customers are more concerned about the price and quality of goods and services rather than the ethnicity or gender of the person providing them. As a result, non-discriminating firms that can offer cheaper labour will have a comparative advantage and be able to earn more profits. Discriminating firms that charge higher prices to cover the cost of their discrimination will lose market share and eventually be forced out of the market. This increases competition for labour and can reduce the wage gap between different groups of workers.

Competitive Markets Tend to