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The Relative Burden of Monopoly on Households with Different Incomes

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  • John Creedy
  • Robert Dixon

Abstract

This paper examines the relative burden of monopoly, measured as the (static) loss of consumers’ surplus for different household income levels. Australian Household Expenditure Survey data are used to generate demand elasticities for 14 commodity groups and to obtain estimates of the relative welfare loss for households with different income levels. The welfare loss associated with monopoly power is found to be higher for low‐income households (such as households that depend on government pensions and benefits for their principal source of income) compared with high‐income households. The results provide an indication that, whatever the size of the absolute welfare loss arising from monopoly, there may be a substantial effect on the distribution of welfare.

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  • John Creedy & Robert Dixon, 1998. "The Relative Burden of Monopoly on Households with Different Incomes," Economica, London School of Economics and Political Science, vol. 65(258), pages 285-293, May.
    • Handle: RePEc:bla:econom:v:65:y:1998:i:258:p:285-293
    DOI: 10.1111/1468-0335.00128
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    Cited by:

    1. Christopher Decker & Amit Zac & Carola Casti & Amédée von Moltke & Ariel Ezrachi, 2022. "Competition Law Enforcement and Household Inequality in the United Kingdom [The UK’s Wealth Distribution and Characteristics of High-Wealth Households]," Journal of Competition Law and Economics, Oxford University Press, vol. 18(4), pages 922-952.
    2. Sologon, Denisa Maria & O'Donoghue, Cathal & Linden, Jules & Kyzyma, Iryna & Loughrey, Jason, 2022. "Welfare and Distributional Impact of Soaring Prices in Europe," IZA Discussion Papers 15738, Institute of Labor Economics (IZA).
    3. 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.
    4. Rodríguez del Valle, Adrián & Fernández-Vázquez, Esteban, 2024. "Analyzing market power of the agricultural industry in Asia," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 652-669.
    5. Plamen Mishev & Nedka Ivanova & Philip Kostov, 2004. "Agricultural policy options distinguishing a subsistence sub- sector in Bulgaria," Computational Economics 0409003, University Library of Munich, Germany.
    6. Can, Zeynep Gizem & O'Donoghue, Cathal & Sologon, Denisa Maria & Smith, Darius & Griffin, Rosaleen & Murray, Una, 2023. "Modelling the Distributional Effects of the Cost-of-Living Crisis in Turkey and the South Caucasus: A Microsimulation Analysis," IZA Discussion Papers 16619, Institute of Labor Economics (IZA).

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