Why is your local independent grocery store getting more expensive? The answer might not be wholesale prices, but a quiet shift in how food gets to the shelf.
In this episode of EconWorks, we examine the competitive fallout when manufacturers like Mondelēz International discontinue Direct-Store-Delivery (DSD) for independent retailers. We move past the logistics to analyze the rigorous economic model behind
The Marginal Cost Shock: How moving to third-party wholesalers adds markups and inefficiencies that only affect independent stores.
Weakened Competition: Why higher costs for local shops allow large chains to raise their prices, even without a cost increase of their own.
The Robinson-Patman Act: Why unequal access to manufacturer-provided logistics may be a violation of federal antitrust law.
Our most recent technical economic appendix served as the basis for this video. To view the complete specification, go to:
The Economics of Distribution Withdrawal in Urban Grocery Markets
This technical appendix accompanies the main article, Distribution as Discrimination: Why the Loss of Manufacturer-Managed Delivery May Weaken Competition in New York City Grocery Markets. It provides a stylized economic model illustrating how the withdrawal of manufacturer-provided distribution services may affect downstream competition in localized grocery markets.
