One size fits all? The value of standardized retail chains

Ben Klopack

RAND Journal of Economics, 2024, vol. 55, issue 1, 55-86

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.

Date: 2024
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https://doi.org/10.1111/1756-2171.12458

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