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

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  • Sharat Ganapati

Abstract

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 1 percent. Estimates based on detailed administrative data show that the rise of the largest firms 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.

Suggested Citation

  • Sharat Ganapati, 2025. "The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies," American Economic Journal: Microeconomics, American Economic Association, vol. 17(1), pages 1-40, February.
    • Handle: RePEc:aea:aejmic:v:17:y:2025:i:1:p:1-40
    DOI: 10.1257/mic.20210015
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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