Income concentration and market demand - 2001

Corrado Benassi , Alessandra Chirco , Marcella Scrimitore Full Version (PDF)
(Quaderni del Dipartimento di Scienze Economiche e Matematico-Statistiche dell'Università del Salento - Collana di Economia, 02/02 / 2001)

We analyze the effects of income concentration and income dispersion on market demand and its elasticity. We show that, following an increase in income concentration towards the middle (measured by variations in mean preservingspread), the increase in demand faced by firms which serve at the margin middle income consumers, is associated with an increase in price elasticity accordingly, the positive effects of the size of the market becoming wider are amplified by a higher degree of competition. Our results hold for a large number of possible income distributions.

Table of Contents


Introduction     PDF
Corrado Benassi , Alessandra Chirco , Marcella Scrimitore 2-2

Personal income distribution and market demand     PDF
Corrado Benassi , Alessandra Chirco , Marcella Scrimitore 3-7

Income share elasticity and the price elasticity of demand     PDF
Corrado Benassi , Alessandra Chirco , Marcella Scrimitore 7-9

An example: income dispersion with lognormal distribution     PDF
Corrado Benassi , Alessandra Chirco , Marcella Scrimitore 9-10

Concluding remarks     PDF
Corrado Benassi , Alessandra Chirco , Marcella Scrimitore 11-11

Bibliography     PDF
11-12

Appendix     PDF
13-15


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