Abstract
Using a simple model of production, the paper focuses upon the impact of intra-firm imports on the theoretical specification of the degree of monopoly, and thereby on the functional distribution of income. In particular, it is shown that a rise in an industry's import penetration need not imply a fall in the degree of monopoly. Data for the United Kingdom new motor-car industry is used to assess the bias that results from ignoring intra-firm imports when estimating the degree of monopoly. It is also pointed out that an identical framework can be employed to analyse intra-firm exports.
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