Abstract
One of the neglected aspects of the theory of value has been that of the explanation of the determination of the price of retail service-of the retail margin. Not only is the analysis of importance in itself, but it is essential as a basis for the explanation of the incidence of the retail sales tax. The traditional value analysis, even as modified by the writers in the field of monopolistic competition, oversimplifies the problem, assuming implicitly that goods are sold directly from physical producer to consumer, or that the retailer serves merely as a conduit through which demands of consumers are transmitted to the manufacturer, the price of retail service being determined in the same manner as that of any facilitating agency in production. Far removed from this type of analysis are the sections in texts on retailing and retail store management or in government investigations of retail practices describing the manner in which retailers actually set margins.' The latter concern short-run phenomena entirely, and fail to take sufficient account of the economic forces operating over longer periods that influence the levels at which prices are set. There has been no reconciliation whatsoever between the two explanations.
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