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Demand Complementarities, Household Production, and Retail Assortments

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Author Info

  • Roger Betancourt

    (University of Maryland)

  • David Gautschi

    (INSEAD)

Abstract

This paper presents a formal model of retail demand, based upon a household production framework, that permits rigorous analysis of retail assortments. The model captures the essential shifting of distribution costs between retailers and consumers that manifests itself in retailers' provision of distribution services for consumers. We apply the model to define rigorously conventional retailing concepts, such as assortment breadth and depth, and to explain the appearance of certain well-known phenomena such as market-basket pricing, nonprice retail competition, and the incentives for retail agglomerations to form. Throughout, distribution services play a critical role in binding together the analytical model and the diverse reality giving rise to retail assortments.

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File URL: http://dx.doi.org/10.1287/mksc.9.2.146
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Bibliographic Info

Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 9 (1990)
Issue (Month): 2 ()
Pages: 146-161

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Handle: RePEc:inm:ormksc:v:9:y:1990:i:2:p:146-161

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Related research

Keywords: retail assortments; distribution services; consumption activities; demand complementarities;

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Cited by:
  1. Raajpoot, Nusser A. & Sharma, Arun & Chebat, Jean-Charles, 2008. "The role of gender and work status in shopping center patronage," Journal of Business Research, Elsevier, vol. 61(8), pages 825-833, August.
  2. Bonanno, Alessandro & Lopez, Rigoberto, 2007. "Competition Effects of Supermarket Services," Research Reports 149176, University of Connecticut, Food Marketing Policy Center.
  3. Emek Basker & Shawn Klimek & Pham Hoang Van, 2008. "Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format," Working Papers 08-23r, Center for Economic Studies, U.S. Census Bureau, revised Sep 2011.
  4. Esbjerg, Lars & Grunert, Klaus G. & Bech-Larsen, Tino & Juhl, Hans Jørn & Brunsø, Karen, 2005. "MANUFACTURER AND RETAILER BRANDS IN FOOD RETAIL ASSORTMENTS Notes from a shopping trip across Europe," MAPP Working Papers 85, University of Aarhus, Aarhus School of Business, The MAPP Centre.
  5. Bonanno, Alessandro & Chenarides, Lauren & Goetz, Stephan J., 2012. "Limited Food Access as an Equilibrium Outcome: An Empirical Analysis," 2012 AAEA/EAAE Food Environment Symposium, May 30-31, Boston, MA 123196, Agricultural and Applied Economics Association.
  6. Katrin Dippold & Harald Hruschka, 2013. "Variable selection for market basket analysis," Computational Statistics, Springer, vol. 28(2), pages 519-539, April.
  7. Dippold, Katrin & Hruschka, Harald, 2010. "Variable Selection for Market Basket Analysis," University of Regensburg Working Papers in Business, Economics and Management Information Systems 443, University of Regensburg, Department of Economics.
  8. Keh, Hean Tat & Chu, Singfat, 2003. "Retail productivity and scale economies at the firm level: a DEA approach," Omega, Elsevier, vol. 31(2), pages 75-82, April.
  9. D. VAN DEN POEL & Jan J. DE SCHAMPHELAERE & G. WETS, 2003. "Direct and Indirect Effects of Retail Promotions," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/202, Ghent University, Faculty of Economics and Business Administration.
  10. Vanessa von Schlippenbach, 2008. "Complementarities, Below-Cost Pricing, and Welfare Losses," Discussion Papers of DIW Berlin 788, DIW Berlin, German Institute for Economic Research.
  11. Roger Betancourt & Monica Cortiñas & Margarita Elorz & Jose Mugica, 2007. "The demand for and the supply of distribution services: A basis for the analysis of customer satisfaction in retailing," Quantitative Marketing and Economics, Springer, vol. 5(3), pages 293-312, September.

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