Team competition when there is within-team inequality

•In experiments, we examine the effect of within-team inequality on public good contributions when the team competes with another team for a prize.•Unequal teams increase their public goods contributions significantly when placed in competition with another team.•The boost to public goods contributions from competition between two unequal teams is bigger than the boost from competition between two equal teams.•The rich respond to competition by increasing their percentage contribution to the public good by more than others in their team.•Compared to unequal teams in a setting without competition, competition lowers inequality within teams that are initially unequally endowed. In experiments, contributions to a team public good increase when the team competes with another team for a prize. In our experiment, this insight generalises to internally unequal teams. Indeed, in some cases the boost to public goods contributions is bigger with unequal teams than equal ones. We also find that the boost to contributions is most significant among the ‘rich’ in the team. Hence, competition not only promotes efficiency, it also reduces inequality in our experiment.