The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies
December 2018
Working Paper Number:
CES-18-49
Abstract
Nearly half of all transactions in the $6 trillion market for manufactured goods in the United
States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of 'superstar' firms - the largest one percent of wholesalers. Structural estimates based on detailed administrative data show that the rise of the largest wholesalers was driven by an intuitive linkage between their sourcing of goods from abroad and an expansion of their domestic distribution network to reach more buyers. Both elements require scale economies and lead to increased wholesaler market shares and markups. Counterfactual analysis shows that despite increases in wholesaler market power, intermediated international trade has two benefits for buyers: directly through buyers' valuation of globally sourced products, and indirectly through the passed-through benefits of wholesaler economies of scale and increased quality.
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:
market,
macroeconomic,
sale,
export,
good,
shipment,
exporter,
oligopolistic,
retailer,
wholesale,
supplier,
buyer,
globalization,
merchandise,
importer,
sourcing
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Longitudinal Business Database,
Chicago Census Research Data Center,
University of California Los Angeles,
Generalized Method of Moments,
Department of Homeland Security,
North American Industry Classification System,
United States Census Bureau,
Herfindahl Hirschman Index,
Commodity Flow Survey,
Harvard Business School,
Federal Statistical Research Data Center
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