Multiproduct Intermediaries

Andrew Rhodes (andrew.rhodes@tse-fr.eu), Makoto Watanabe and Jidong Zhou (jidong.zhou@yale.edu)

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Abstract: This paper develops a new framework for studying multiproduct intermediaries when consumers demand multiple products and face search frictions. We show that a multiproduct intermediary is profitable even when it does not improve consumer search efficiency. The intermediary optimally stocks high-value products exclusively to attract consumers to visit and then profits by selling nonexclusive products that are relatively cheap to buy from upstream suppliers. Relative to the social optimum, the intermediary tends to be too big and stock too many products exclusively. We use the framework to study the design of shopping malls and the impact of direct-to-consumer sales by upstream suppliers on the retail market.

Date: 2021-02
New Economics Papers: this item is included in nep-com and nep-mic
Note: View the original document on HAL open archive server: https://hal.science/hal-03160803v1
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Citations: View citations in EconPapers (4)

Published in Journal of Political Economy, 2021, 129 (2), pp.421-464. ⟨10.1086/711917⟩

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Related works:
Working Paper: Multiproduct Intermediaries (2020)
Working Paper: Multiproduct Intermediaries (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03160803

DOI: 10.1086/711917

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