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The impact of product diversity and distribution networks on consumption expansion

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  • Ding, Chaoxun
  • Zhang, Ruidan
  • Wu, Xuepin

Abstract

Investigation on the influencing factors of consumption expansion is an important subject in business research. This study constructs a consumption utility function and analyzes the relationship between search cost and product heterogeneity and equilibrium price. Employing the data on 31 regions in China from 2002 to 2020, the panel data model is used to verify the results of the theoretical analysis. We draw the following conclusions. (1) Expanding the number of distribution outlets will lead to a decline in the equilibrium price, and an increase in product diversity prompts consumers to conduct more searches. (2) Expanding distribution networks can increase residents’ total consumption and consumption level. (3) An increase in product diversity can expand resident consumption. The conclusions suggest that distributors and retailers can increase the categories of their products, provide consumers with diversified decision-making space, and stimulate consumption expansion.

Suggested Citation

  • Ding, Chaoxun & Zhang, Ruidan & Wu, Xuepin, 2023. "The impact of product diversity and distribution networks on consumption expansion," Journal of Business Research, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:jbrese:v:161:y:2023:i:c:s0148296323001911
    DOI: 10.1016/j.jbusres.2023.113833
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    Cited by:

    1. Dong Guo & Lin Li & Lu Qiao & Fengyu Qi, 2023. "Digital economy and consumption upgrading: scale effect or structure effect?," Economic Change and Restructuring, Springer, vol. 56(6), pages 4713-4744, December.

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