Lorenz and Perfect Inequality Differences

Lorenz and Perfect Inequality Differences

The concentration of the level of activity can be visually represented by the Lorenz curve and its deviation from the perfect equality line, which assumes a uniform distribution. This example considers 10 carriers and their market share. If each carrier had the same market share, the plot of their cumulative number (X) and cumulative traffic (Y) would be the perfect equality line. In this case, traffic distribution is unequal, with the three largest carriers accounting for 60% of the market. The largest carrier accounts for 25% of the market and thus has a Lorenz difference of 15% (25%-10%) and an inequality difference of 75% (100%-25%). The Gini coefficient (G) would be calculated by dividing the summation of Lorenz differences by the summation of Lorenz differences added to the summation of inequality differences. G = 196 / (196+254) = 0.435.