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The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies

Author

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  • Sharat Ganapati

Abstract

Half of all transactions in the $6 trillion market for manufactured goods in the United States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of "superstar" firms—the largest 1 percent. Estimates based on detailed administrative data show that the rise of the largest firms was driven by an intuitive linkage between their sourcing of goods from abroad and an expansion of their domestic distribution network to reach more buyers. Both elements require scale economies and lead to increased wholesaler market shares and markups.

Suggested Citation

  • Sharat Ganapati, 2025. "The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies," American Economic Journal: Microeconomics, American Economic Association, vol. 17(1), pages 1-40, February.
    • Handle: RePEc:aea:aejmic:v:17:y:2025:i:1:p:1-40
    DOI: 10.1257/mic.20210015
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    Cited by:

    1. Eckel, Carsten & Riezman, Raymond, 2020. "CATs and DOGs," Journal of International Economics, Elsevier, vol. 126(C).
    2. Steven Berry & Martin Gaynor & Fiona Scott Morton, 2019. "Do Increasing Markups Matter? Lessons from Empirical Industrial Organization," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 44-68, Summer.
    3. Giroldo, Renato & Hollenbeck, Brett, 2021. "Concentration, Retail Markups, and Countervailing Power: Evidence from Retail Lotteries," MPRA Paper 109039, University Library of Munich, Germany.
    4. Kalina Manova & Andreas Moxnes & Oscar Perello, 2025. "Productivity, matchability and intermediation in production networks," CEP Discussion Papers dp2082, Centre for Economic Performance, LSE.
    5. Emmanuel Dhyne & Ayumu Ken Kikkawa & Magne Mogstad & Felix Tintelnot, 2021. "Trade and Domestic Production Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(2), pages 643-668.
    6. Emek Basker & Timothy Simcoe, 2021. "Upstream, Downstream: Diffusion and Impacts of the Universal Product Code," Journal of Political Economy, University of Chicago Press, vol. 129(4), pages 1252-1286.
    7. Gupta, Apoorva & Stiebale, Joel, 2024. "Gains from patent protection: Innovation, market power and cost savings in India," DICE Discussion Papers 414, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Miller, Nathan H., 2025. "Industrial organization and The Rise of Market Power," International Journal of Industrial Organization, Elsevier, vol. 98(C).
    9. Oscar Perello, 2025. "Trade Intermediation and Resilience in Global Sourcing," CEPREMAP Working Papers (Docweb) 2503, CEPREMAP.
    10. Alessandro Borin & Francesco Paolo Conteduca & Fabrizio Leone & Michele Mancini & Patrick Zoi, 2025. "How Global Are Local Value Chains?," CESifo Working Paper Series 12271, CESifo.
    11. Chang-Tai Hsieh & Esteban Rossi-Hansberg, 2023. "The Industrial Revolution in Services," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(1), pages 3-42.
    12. Alexander, Patrick & Han, Lu & Kryvtsov, Oleksiy & Tomlin, Ben, 2024. "Markups and Inflation in Oligopolistic Markets: Evidence from Wholesale Price Data," CEPR Discussion Papers 19419, C.E.P.R. Discussion Papers.
    13. Pol Antràs & Teresa C. Fort & Agustín Gutiérrez & Felix Tintelnot, 2022. "Trade Policy and Global Sourcing: An Efficiency Rationale for Tariff Escalation," NBER Working Papers 30225, National Bureau of Economic Research, Inc.
    14. Jan De Loecker & Jan Eeckhout & Gabriel Unger, 2020. "The Rise of Market Power and the Macroeconomic Implications [“Econometric Tools for Analyzing Market Outcomes”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 561-644.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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