■ Paper basic information
Author: N Lusiani, E DiVito
Source: Roosevelt Institute Issue Brief, 2024
Topic: Correlation analysis between market concentration and wealth concentration
■ Key findings
- As market concentration increases, the wealth concentration of top companies and capital also deepens.
- A key mechanism through which the concentration of market power among public companies strengthens the inequality structure.
- No inequality reduction policy will be fundamentally effective without curbing corporate power.
- Monopolistic position of a few companies in the capital market → excess profits → concentration of shareholders → structure of passing down wealth
- The most direct empirical study on the correlation between market concentration and wealth concentration since Piketty's Capital Theory
■ Circular structure of capital concentration
Concentrating market power --> Generating excess profits --> Concentrating capital reinvestment + shareholder dividends --> Increasing wealth inequality --> Strengthening market dominance with greater capital power
--> Vicious cycle continues
■ Application to Korean capital market
- Korea: Market concentration centered on large conglomerates (chaebols) ranks highest in OECD countries
- Top 10 groups occupy more than 60% of KOSPI market capitalization
- This concentrated structure forms a network that exploits lower-level companies through CB issuance, executive dispatch, and equity pyramiding.
- Individual investors are not the beneficiaries of this concentrated structure, but **bear the final costs**
■ Connection with relational risk
- Lusiani’s (2024) macro-empirical evidence supports the theoretical background of relational risk at a global level.
- Carroll et al.'s (2024) corporate network theory + Lusiani's (2024) market concentration demonstration = academic foundation for relational risk
- Three-tiered chain of market concentration → corporate network concentration → damage to individual investors
- It is this “trail of focus” that RaymondsRisk captures — executive roles, CB investor networks, governance ideals and more.
■ One-line summary of the evangelist
> “The more the market is concentrated in the hands of a few, the more wealth is concentrated in the hands of the few. And traces of that concentration inevitably remain in the corporate network.”
■ Reference materials
- Lusiani, N. & DiVito, E. (2024). Concentrated Markets, Concentrated Wealth. *Roosevelt Institute Issue Brief*.
- Overview of relational risk: https://www.konnect-ai.net/whitepaper
- Blog series: https://blog.naver.com/raymondsrisk
#relational risk #raymondsrisk #raymondsindex #konnectai #capital concentration #market monopoly #wealth inequality #individual investor
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