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;
JEL codes
- D83: Search • Learning • Information and Knowledge • Communication • Belief
- L42: Vertical Restraints • Resale Price Maintenance • Quantity Discounts
- L81: Retail and Wholesale Trade • e-Commerce
Replaced by
Andrew Rhodes, Makoto Watanabe, and Jidong Zhou, “Multiproduct Intermediaries”, Journal of Political Economy, vol. 129, n. 2, February 2021, p. 421–464.
Reference
Andrew Rhodes, Makoto Watanabe, and Jidong Zhou, “Multiproduct Intermediaries”, TSE Working Paper, n. 17-857, October 2017, revised May 2020.
See also
Published in
TSE Working Paper, n. 17-857, October 2017, revised May 2020