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Inequality and market concentration, when shareholding is more skewed than consumption

Author

Listed:
  • Joshua Gans
  • Andrew Leigh
  • Martin Schmalz
  • Adam Triggs

Abstract

Economic theory suggests that monopoly prices hurt consumers but benefit shareholders. But in a world where individuals or households can be both consumers and shareholders, the impact of market power on inequality depends in part on the relative distribution of consumption and corporate equity ownership across individuals or households. The paper calculates this distribution for the United States, using data from the Survey of Consumer Finances and the Consumer Expenditure Survey, spanning nearly three decades from 1989 to 2016. In 2016, the top 20 per cent consumed approximately as much as the bottom 60 per cent, but had 15 times as much corporate equity. Because ownership is more skewed than consumption, increased mark-ups increase inequality. Moreover, over time, corporate equity has become even more skewed relative to consumption.

Suggested Citation

  • Joshua Gans & Andrew Leigh & Martin Schmalz & Adam Triggs, 2019. "Inequality and market concentration, when shareholding is more skewed than consumption," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(3), pages 550-563.
    • Handle: RePEc:oup:oxford:v:35:y:2019:i:3:p:550-563.
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    File URL: http://hdl.handle.net/10.1093/oxrep/grz011
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    Cited by:

    1. Chrysovalantis Amountzias, 2024. "Market power and income disparities: How can firms influence the gap between capital and labor earnings," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 861-888, July.
    2. Steven C. Salop & Fiona Scott Morton, 2021. "The 2010 HMGs Ten Years Later: Where Do We Go From Here?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 81-101, February.
    3. Kopp, Thomas & Nabernegg, Markus, 2022. "Inequality and Environmental Impact – Can the Two Be Reduced Jointly?," Ecological Economics, Elsevier, vol. 201(C).
    4. Stephen Davies & Franco Mariuzzo, 2022. "Inequality and concentration: Are the poor more exposed to concentrated markets?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2022-01, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    5. Lachlan Hotchin & Andrew Leigh, 2024. "Inequality and Market Concentration: New Evidence from Australia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 70(4), pages 1216-1225, December.
    6. Jasmine Mondolo, 2021. "Macroeconomic dynamics and the role of market power. The case of Italy," DEM Working Papers 2021/17, Department of Economics and Management.
    7. Assouad, Lydia, 2023. "Rethinking the Lebanese economic miracle: The extreme concentration of income and wealth in Lebanon, 2005–2014," Journal of Development Economics, Elsevier, vol. 161(C).
    8. Andrew Leigh & Adam Triggs, 2021. "Common Ownership of Competing Firms: Evidence from Australia," The Economic Record, The Economic Society of Australia, vol. 97(318), pages 333-349, September.
    9. Pedro Cavalcanti Gonçalves Ferreira, 2021. "Market Power and Inequality: a model of the Brazilian economy," Working Papers REM 2021/0201, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    10. Christian Reiner & Christian Bellak, 2023. "Hat die ökonomische Macht von Unternehmen in Österreich zugenommen? Teil 1," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 49(1), pages 21-59.
    11. Assouad, Lydia, 2023. "Rethinking the Lebanese economic miracle: the extreme concentration of income and wealth in Lebanon, 2005–2014," LSE Research Online Documents on Economics 117680, London School of Economics and Political Science, LSE Library.
    12. Dögüs, Ilhan, 2021. "Production structure, output and profits - A note," ZÖSS-Discussion Papers 88, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    13. Shawhan, Daniel & Peplinski, McKenna & Robson, Sally & Russell, Ethan & Ziegler, Ethan & Domeshek, Maya & Palmer, Karen, 2025. "Clean Power Delayed: Effects of Infrastructure Delays on Health, Environment, and US Households," RFF Working Paper Series 25-15, Resources for the Future.
    14. Andrew Leigh, 2023. "How uncompetitive markets hurt workers," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 26(1), pages 1-21.
    15. Pengyu Chen & Yuanyuan Hao, 2022. "Digital transformation and corporate environmental performance: The moderating role of board characteristics," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1757-1767, September.
    16. Ganglmair Bernhard & Kann Alexander & Tsanko Ilona, 2021. "Markups for Consumers," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(5-6), pages 701-734, November.
    17. Mondolo, Jasmine, 2021. "Macroeconomic dynamics and the role of market power. The case of Italy," MPRA Paper 110172, University Library of Munich, Germany, revised 05 Oct 2021.
    18. Han, Minsoo & Pyun, Ju Hyun, 2021. "Markups and income inequality: Causal links, 1975-2011," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 290-312.

    More about this item

    Keywords

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    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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