Inequality and Market Concentration, When Shareholding is More Skewed than Consumption

16 Pages Posted: 26 Dec 2018 Last revised: 21 Nov 2022

See all articles by Joshua S. Gans

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Andrew Leigh

Australian House of Representatives Parliament House

Martin C. Schmalz

CEPR; University of Oxford - Finance; CESifo; European Corporate Governance Institute (ECGI)

Adam Triggs

Australian National University (ANU)

Date Written: December 2018

Abstract

Economic theory suggests that monopoly prices hurt consumers but benefit shareholders. But in a world where individuals or households can be both consumers and shareholders, the impact of market power on inequality depends in part on the relative distribution of consumption and corporate equity ownership across individuals or households. The paper calculates this distribution for the United States, using data from the Survey of Consumer Finances and the Consumer Expenditure Survey, spanning nearly three decades from 1989 to 2016. In 2016, the top 20 percent consumed approximately as much as the bottom 60 percent, but had 13 times as much corporate equity. Because ownership is more skewed than consumption, increased mark-ups increase inequality. Moreover, over time, corporate equity has become even more skewed relative to consumption.

Suggested Citation

Gans, Joshua S. and Leigh, Andrew and Schmalz, Martin C. and Schmalz, Martin C. and Triggs, Adam, Inequality and Market Concentration, When Shareholding is More Skewed than Consumption (December 2018). NBER Working Paper No. w25395, Available at SSRN: https://ssrn.com/abstract=3306105

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

NBER ( email )

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United States

Andrew Leigh

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Martin C. Schmalz

CEPR ( email )

London
United Kingdom

University of Oxford - Finance ( email )

United States

CESifo ( email )

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Munich, DE-81679
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels
Belgium

Adam Triggs

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

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