Multiproduct Intermediaries and Optimal Product Range

Rhodes, Andrew, Watanabe, Makoto and Zhou, Jidong (2017) Multiproduct Intermediaries and Optimal Product Range. TSE Working Paper, n. 17-857, Toulouse

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This paper develops a framework for studying the optimal product range choice of a multiproduct intermediary when consumers demand multiple products. In the optimal product selection, the intermediary uses exclusively stocked high-value products to increase store tra¢ c, and at the same time earns pro?t mainly from non-exclusively stocked products which are relatively cheap to buy from upstream suppliers. By doing this the intermediary can earn strictly positive pro?t, including in situations where it does not improve e¢ ciency in selling products. A linkage between product selection and product demand features such as size and shape is established. It is also shown that relative to the social optimum, the intermediary tends to be too big and stock too many products exclusively.

Item Type: Monograph (Working Paper)
Language: English
Date: October 2017
Place of Publication: Toulouse
Uncontrolled Keywords: intermediaries, product range, multiproduct demand, search, exclusive contracts
JEL codes: D83 - Search; Learning; Information and Knowledge; Communication; Belief
L42 - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
L81 - Retail and Wholesale Trade; Warehousing; e-Commerce
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 17 Apr 2018 07:50
Last Modified: 20 Nov 2018 13:11

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