Abstract
I propose a general equilibrium model of competition in manufacturing and retailing. Relative to the counterfactual of direct sales by manufacturers, the retail sector increases manufacturing entry and produced variety. Although double marginalization in the sales channel raises prices and hurts consumers in quantity, in equilibrium it increases consumed variety and convenience, both valued positively. Consistent with observations, the equilibrium predicts that the size of the retail sector is a constant fraction of the total economy across nations of differing size and wealth.
Full Text
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call