Oscar Bajo () (Universidad de Castilla-La Mancha, Departamento de Economía y Empresa, Ronda de Toledo s/n, 13071 Ciudad Real, Spain Universidad Complutense de Madrid, Departamento de Fundamentos del Análisis Económico I, Campus de Somosaguas, 28223 Madrid, Spain) Rafael Salas () (Universidad de Castilla-La Mancha, Departamento de Economía y Empresa, Ronda de Toledo s/n, 13071 Ciudad Real, Spain Universidad Complutense de Madrid, Departamento de Fundamentos del Análisis Económico I, Campus de Somosaguas, 28223 Madrid, Spain)
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The aim of this paper is to provide a connection between concentration and inequality. In particular, we show that the general entropy inequality indices are, among inequality measures, those consistent with the whole set of Hannah-Kay concentration indices. We isolate the inequality component underlying concentration measures, obtaining an explicit additive decomposition of the change in concentration into the change in its two components, i.e., inequality and the number of firms. This relationship proves to be valid for the whole set of Hannah-Kay concentration indices, and embodies as particular cases some others previously found in the literature.
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Find related papers by JEL classification: L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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