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Personal Income Distribution and Market Structure

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  • Corrado Benassi
  • Roberto Cellini
  • Alessandra Chirco

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.

Suggested Citation

  • Corrado Benassi & Roberto Cellini & Alessandra Chirco, 2002. "Personal Income Distribution and Market Structure," German Economic Review, Verein für Socialpolitik, vol. 3(3), pages 327-338, August.
    • Handle: RePEc:bla:germec:v:3:y:2002:i:3:p:327-338
    DOI: 10.1111/1468-0475.00062
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    12. Corrado Benassi & Roberto Cellini & Alessandra Chirco, 1999. "Market power under income polarization," Journal of Economics, Springer, vol. 69(3), pages 289-298, October.
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    Cited by:

    1. Corrado Benassi & Alessandra Chirco, 2004. "Income Distribution, Price Elasticity and the ‘Robinson Effect’," Manchester School, University of Manchester, vol. 72(5), pages 591-600, September.
    2. Osharin Alexander & Verbus Valery, 2015. "Heterogeneous consumers and market structure in a monopolistically competitive setting," EERC Working Paper Series 15/03e, EERC Research Network, Russia and CIS.

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