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The Impact of Distance in Retail Markets

Author

Listed:
  • Danny Edgel
  • Jean-François Houde
  • Peter Newberry
  • Katja Seim

Abstract

We examine the demand-side implications of Amazon's distribution and logistics investments. Our results indicate that online demand—transactions at Amazon and its competitors—does not respond to the consumer's proximity to Amazon's upstream fulfillment distribution facilities, suggesting that their densification did not differentially improve local shipping times and on-time delivery. Instead, we find that investments in last-mile delivery facilities and services allow the company to improve shipping times more directly in the urban markets served by these facilities, simultaneously increasing demand through the rollout of same-day service options and reducing the visits to traditional brick-and-mortar retail.

Suggested Citation

  • Danny Edgel & Jean-François Houde & Peter Newberry & Katja Seim, 2023. "The Impact of Distance in Retail Markets," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 229-233, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:229-33
    DOI: 10.1257/pandp.20231066
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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