Income Inequality and Product Variety: Empirical Evidence

Dieter Pennerstorfer, Nora Schindler, Christoph Weiss, Biliana Yontcheva

Publikation: Working/Discussion Paper

Abstract

This article investigates the relationship between income inequality and firms’ locations andproduct choices. Using detailed information on income at a regionally disaggregated level andindividual data on Austrian restaurants, we demonstrate that firm conduct crucially depends on the distribution (in addition to the level) of income. Local markets with higher income inequality are characterized by a larger number of firms, offering a broader range of products and product variants that are on average less common. These findings indicate that local demand is substantially influenced by the heterogeneity in consumers’ income endowments, resulting in large differences in product variety.
OriginalspracheEnglisch
PublikationsstatusVeröffentlicht - 2020

Österreichische Systematik der Wissenschaftszweige (ÖFOS)

  • 211 not use (Altbestand)
  • 502013 Industrieökonomik
  • 502034 Regulierungsökonomik

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