Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/225948
Authors: 
Pennerstorfer, Dieter
Schindler, Nora
Weiss, Christoph R.
Yontcheva, Biliana
Year of Publication: 
2020
Series/Report no.: 
DICE Discussion Paper No. 353
Abstract: 
This article investigates the relationship between income inequality and firms' locations and product choices. Using detailed information on income at a regionally disaggregated level and individual 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 in uenced by the heterogeneity in consumers' income endowments, resulting in large differences in product variety.
Subjects: 
income inequality
product variety
product differentiation
firm conduct
restaurants
JEL: 
L22
D31
R12
L83
ISBN: 
978-3-86304-352-0
Document Type: 
Working Paper

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