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One size fits all? The value of standardized retail chains

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  • Ben Klopack

Abstract

Multi‐outlet firms, or chains, account for most US retail spending. This article quantifies the welfare and profit effects of standardized chains in the restaurant industry: chains face higher demand than independents, but are less flexible in customizing product selection or prices across locations. I find that on average chains could earn 19% higher variable profits if they could customize their product optimally, but they would lose 28% of their variable profits if they were to lose their demand advantages. Local policies that ban chains would decrease consumer welfare by 1.5% to 5.4% of restaurant spending and disproportionately impact lower income consumers.

Suggested Citation

  • Ben Klopack, 2024. "One size fits all? The value of standardized retail chains," RAND Journal of Economics, RAND Corporation, vol. 55(1), pages 55-86, March.
    • Handle: RePEc:bla:randje:v:55:y:2024:i:1:p:55-86
    DOI: 10.1111/1756-2171.12458
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