A Note on Income Polarization and Free-Entry Equilibrium: United States versus European Union

Income polarization and industry concentration (especially in sectors where price competition is supposed to be stiffer) are both generally deemed to be higher in the United States than in the European Union. In this note we provide an interpretation of this evidence by establishing a theoretical link, running from income polarization to industry concentration: the former may decrease the equilibrium number of firms, via its effect on market demand and elasticity within Cournot oligopoly.