Taste-based Discrimination Theory

Consider a perfectly competitive labor market in which there are equal numbers of male and female workers. The wages of men and women are unknown. Now consider two companies in the market: Company A has discriminatory preferences against women (d = 0.5), but Company B does not have discriminatory preferences against women (d = 0). Which of these statements is true?

• Company A will earn a lower profit than Company B.
• If women earn lower wages, Company B will only hire women.
• If more women enter the labor market, women's relative wages will decrease.
• In a competitive market, Company A will be driven out of business.
• More than one of these statements must be true.