Personal Income Distribution and Market Structure

Corrado Benassi, Roberto Cellini and Alessandra Chirco ()

German Economic Review, 2002, vol. 3, issue 3, 327-338

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.

Date: 2002
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https://doi.org/10.1111/1468-0475.00062

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