Multiproduct Intermediaries

Andrew Rhodes (), Makoto Watanabe and Jidong Zhou ()

No 17-857, TSE Working Papers from Toulouse School of Economics (TSE)

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 proÖtable even when it does not improve consumer search e¢ ciency. In its optimal product selection, it stocks high-value products exclusively to attract consumers to visit, then proÖts by selling non-exclusive products which are relatively cheap to buy from upstream suppliers. However, relative to the social optimum, the intermediary tends to be too big and stock too many products exclusively. As applications we use the framework to study the optimal design of a shopping mall, and the impact of direct-to-consumer sales by upstream suppliers on the retail market.

Keywords: intermediaries; product range; multiproduct demand; search; direct-to-consumer sales; product range; exclusivity (search for similar items in EconPapers)
JEL-codes: D83 L42 L81 (search for similar items in EconPapers)
Date: 2017-10, Revised 2020-05
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Multiproduct Intermediaries (2021)
Working Paper: Multiproduct Intermediaries (2020)
Working Paper: Multiproduct Intermediaries (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:32174

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