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

Sharat Ganapati

No 32036, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Nearly half of all transactions in the $5 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. 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. Counterfactual analysis shows that despite increases in wholesaler market power and markups, scale has benefits. Buyers gain access to globally sourced varieties, nationwide distribution networks, and increased quality while wholesalers decrease their marginal costs.

JEL-codes: D43 F14 L13 L81 R12 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-com, nep-ind and nep-int
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Related works:
Journal Article: The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies (2025)
Working Paper: The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies (2018)
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