BUYING LOCALLY

George Mailath, Andrew Postlewaite and Larry Samuelson

International Economic Review, 2016, vol. 57, issue 4, 1179-1200

Abstract: ‘‘Buy local” arrangements encourage members of a community or group to patronize one another instead of the external economy. They range from formal mechanisms such as local currencies to informal “I'll buy from you if you buy from me” arrangements and are often championed on social or environmental grounds. We show that in a monopolistically competitive economy, buy local arrangements can have salutary effects even for selfish agents immune to social or environmental considerations. Buy local arrangements effectively allow firms to exploit the equilibrium price–cost gap to profitably expand their sales at the going price.

Date: 2016
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https://doi.org/10.1111/iere.12194

Related works:
Working Paper: Buying Locally (2015)
Working Paper: Buying Locally (2015)
Working Paper: Buying Locally (2015)
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