Inequality and concentration: Are the poor more exposed to concentrated markets?

Abstract

This paper contributes to the empirical literature on the distributional impact of competition. Using a novel combination of the national survey of household expenditure and the business structure database for the UK, it establishes two descriptive facts. First, the poor are relatively more dependent than the rich on their product purchases and services supplied by more concentrated markets. Second, it finds a significant negative correlation across products and services between the income elasticity of demand and the concentration of the industries supplying those products. At this stage, we draw no inferences from these results. However, this analysis points to some interesting research questions and policy issues concerning the nature of competition in those industries which supply the necessities in consumption.

Keywords: household expenditure, income elasticity of demand, industry concentration.

JEL Classification: D63, H11, L22.