ABSTRACT
In his book on economic discrimination Gary Becker 1 has developed a method for analyzing the economic effects of discrimination by dividing society into two sectors (white and black) and treating each sector as a separate society with its own endowments of labor and capital. One of the sectors (white) is taken to have a higher capital-labor ratio than the other sector (black), and to export capital to the latter. Becker assumes that whites have a taste for discrimination and that they require a return on capital which is higher in the black sector than in the white sector. Discrimination is defined as a situation where whites export less capital than is required for maximizing the total income of the two sectors. 2
