Inequality: a hidden cost of market power
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Abstract This paper explores the impact of competition on inequality by developing a new model to illustrate how higher profits from market power, and associated higher prices, could influence the distribution of wealth and income. We analyse data from eight OECD countries—Canada, France, Germany, Korea, Japan, Spain, the United Kingdom, and the United States. In an average country in the sample, market power increases the wealth of the richest 10 per cent by between 12 and 21 per cent for a range of reasonable assumptions about savings behaviour, while it reduces the income of the poorest 20 per cent by 11 per cent or more. The results contribute to the economic literature on the origins of inequality, suggesting that lack of competition may be one source of economic inequality.
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Where dominant firms charge higher prices beyond their own costs, the poorest segments of society are disproportionately affected.
“Where dominant firms charge higher prices beyond their own costs, the poorest segments of society are disproportionately affected (Ennis et al. 2019).”
From Corporate concentration and power matter for agency in food systems (2025) · cites this paper as Ennis et al. 2019
Concentrated firms can shape the contours of markets in ways that enable them to earn higher profits than they would in a more competitive market, fueling inequities.
“It is well established in the economics literature that concentrated firms can shape the contours of markets in ways that enable them to earn higher profits than they would in a more competitive market, fueling inequities (De Loecker and Eeckhout 2018; Ennis et al. 2019).”
From Corporate concentration and power matter for agency in food systems (2025) · cites this paper as Ennis et al. 2019
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Sorted by citations
Corporate concentration and power matter for agency in food systems
Clapp, J., Vriezen, R., Laila, A., Conti, C., Gordon, L., Hicks, C., & Rao, N. (2025) · Food Policy · doi:10.1016/j.foodpol.2025.102897 · Cited by 64 · see citing works
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- Authors
- Ennis, S. F., Gonzaga, P., & Pike, C.
- Affiliations
- University of East Anglia (GB)
- Corresponding author
- Ennis, Sean F
- ORCID
- Ennis, Sean F
- Venue
- Oxford Review of Economic Policy
- Publisher
- Oxford University Press (OUP)
- Published
- 2019
- Volume
- 35
- Issue
- 3
- Pages
- 518-549
- ISSN
- 0266-903X (ISSN-L)
- 1460-2121
- OpenAlex
- W2612969947
- Cited by
- 73
- References
- 42
- Citations by year
- 2026: 5 · 2025: 7 · 2024: 8 · 2023: 7 · 2022: 12 · 2021: 15 · 2020: 10 · 2019: 3 · 2018: 5 · 2017: 1
- FWCI
- 20.14
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- Oxford Review of Economic Policy (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- UEA Digital Repository (University of East Anglia) (submittedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
- Keywords
- market power, economic inequality, competition, income distribution, wealth distribution, monopoly profits, price, saving behavior, origins of inequality, OECD countries
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