The Effect of Reductions in Concentration on Income Distribution

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Abstract
The simulation model of this study indicates that a decline in above-normal profits associated with concentration will cause a redistribution of income from the highest of six income classes to low and middle income classes. The magnitude of gains and losses ranges from 0.2% to 0.9% of income for reductions in four-firm concentration ratios to 50% in all manufacturing industries. The methodology uses consumer expenditure data and input-output information to estimate the impact on payments made to capital and uses income tax data on income sources by income class to estimate the impact on income received from capital ownership. Estimates of the change in profits resulting from a change in concentration are based on a published concentration-profits regression.

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