Income concentration and market demand
AbstractWe analyze the effects of income concentration and income dispersion on market demand and its elasticity. We show that, following an increase in income concentration towards the middle (measured by variations in mean preserving spread), the increase in demand faced by firms which serve at the margin middle income consumers, is associated with an increase in price elasticity--accordingly, the positive effects of the size of the market becoming wider are amplified by a higher degree of competition. Our results hold for a large number of possible income distributions. Copyright 2002, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 54 (2002)
Issue (Month): 4 (October)
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Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
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- Corrado Benassi & Alessandra Chirco, 2008. "An elasticity approach to equilibrium and preference concentration in the Hotelling game," Journal of Economics, Springer, vol. 94(2), pages 125-141, July.
- Corrado Benassi & Marcella Scrimitore, 2013. "Income Distribution in Network Markets," Working Paper Series 13_13, The Rimini Centre for Economic Analysis.
- Marcella Scrimitore, 2003. "Symmetric and Asymmetric Equilibria in a Spatial Duopoly," ERSA conference papers ersa03p194, European Regional Science Association.
- Diego Winkelried, 2005. "Income Distribution and the Size of the Informal Sector," Development and Comp Systems 0512005, EconWPA.
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