 The reason for this is that imperfect competition in the output market tends to reduce the real wage, leading to the household substituting away from consumption towards leisure.When government spending is increased, the corresponding increase in lump-sum taxation causes both leisure and consumption to decrease (assuming that they are both a normal good).The greater the degree of imperfect competition in the output market, the lower the real wage and hence the more the reduction falls on leisure (i.e.