The hypothesis in this paper is that the existence of retail markets may not necessarily be
determined by spatial factors and increasing return in transportation (or increasing returns in retailing),
but can be explained by the rational behaviour of firms operating in a stochastic environment. It is shown
that demand uncertainty can serve as an independent source of retail trade. Consequently, the ability of
firms to process information and predict demand (i.e., to decrease demand uncertainty) may affect the
characteristics of retail markets. The results indicate that risk-averse firms always devote resources to
demand forecasting; producers are better off trading with retailers than with final consumers; and the
volume of output supplied through retail markets is greater than it would be if producers traded directly
with consumers (thus benefiting social welfare). Furthermore, the paper shows that technological progress
in data-processing, which allows for cheaper and better predictions of market demand, increases the
number of firms operationg in retail markets. (authors' abstract) / Series: Discussion Papers of the Institute for Economic Geography and GIScience
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:4143 |
| Date | 03 1900 |
| Creators | Cukrowski, Jacek, Fischer, Manfred M. |
| Publisher | WU Vienna University of Economics and Business |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | English |
| Detected Language | English |
| Type | Paper, NonPeerReviewed |
| Format | application/pdf |
| Relation | http://epub.wu.ac.at/4143/ |
Page generated in 0.002 seconds