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Personal Income Distribution and Market Structure

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Author Info
Corrado Benassi
Roberto Cellini
Alessandra Chirco

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Abstract

Income distribution affects market demand and its elasticity, and, as a consequence, the optimal behaviour of firms and market equilibrium. This paper focuses on the effects of income polarization, and presents a model where - for any unimodal density function describing income distribution of the consumers - income polarization leads to market concentration, i.e., to a smaller number of firms able to survive in the long run, provided that the firms' fixed costs are sufficiently low. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2002.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/1468-0475.00062
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Article provided by Blackwell Publishing in its journal German Economic Review.

Volume (Year): 3 (2002)
Issue (Month): 3 (08)
Pages: 327-338
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Handle: RePEc:bla:germec:v:3:y:2002:i:3:p:327-338

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