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

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  • Sharat Ganapati

Abstract

Nearly 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 one percent of wholesalers. Structural estimates based on detailed administrative data show that the rise of the largest wholesalers 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. Counterfactual analysis shows that despite increases in wholesaler market power, intermediated international trade has two benefits for buyers: directly through buyers’ valuation of globally sourced products, and indirectly through the passed-through benefits of wholesaler economies of scale and increased quality.

Suggested Citation

  • Sharat Ganapati, 2018. "The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies," Working Papers 18-49, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:18-49
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    File URL: https://www2.census.gov/ces/wp/2018/CES-WP-18-49.pdf
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    Cited by:

    1. Magne Mogstad & Emmanuel Dhyne & Ayumu Kikkawa & Felix Tintelnot, 2017. "Trade and Domestic Production Networks," 2017 Meeting Papers 381, Society for Economic Dynamics.
    2. Jan De Loecker & Jan Eeckhout, 2017. "The Rise of Market Power and the Macroeconomic Implications," NBER Working Papers 23687, National Bureau of Economic Research, Inc.
    3. Emek Basker & Timothy Simcoe, 2017. "Upstream, Downstream: Diffusion and Impacts of the Universal Product Code," NBER Working Papers 24040, National Bureau of Economic Research, Inc.
    4. repec:aea:jecper:v:33:y:2019:i:3:p:44-68 is not listed on IDEAS

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