Independent supermarkets in New York City are facing a new competitive threat, but it isn’t coming from the "big box" stores—it’s coming from the supply chain.
When manufacturers discontinue manufacturer-managed delivery, they don’t just change a shipping route; they change the economic viability of small retailers. In this episode, we break down how the loss of these services increases marginal costs for independent grocers, potentially leading to higher retail prices and fewer neighborhood options.
We explore:
The Power of DSD: Why manufacturer-provided merchandising is a “hidden” support system for small shops.
Asymmetric Cost Shocks: How “price-free” service changes can weaken market competition by favoring large chains.
Welfare Analysis: Why a reduction in independent stores leads to less product variety and lower consumer surplus.
To view the full economic technical details, click this link:
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.
