The outputs of retail activities: French evidence

Abstract

A new economic framework is applied to the empirical analysis of retail margins. This framework is founded on the definition of profits and incorporates recent theoretical developments formalizing the role of distribution services as outputs of retail activities. The main results are: the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins; variables that purport to capture the oligopolistic features of market structure have little association with the variation in retail margins; hypotheses of price setting and quantity setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data. The data base is information on 50 retail sectors from the 1982 survey of firms in commerce and the 1983 survey of firms in services reported by INSEE.

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