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The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies

December 2018

Written by: Sharat Ganapati

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.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
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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