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Fading choice

Transport costs and variety in consumer goods

Bibliographic Data

ID9727618
AuthorsJan Willem Gunning (0000-0002-8402-8793, Vrije Universiteit Amsterdam), Pramila Krishnan (ODID and University of Oxford, corresponding author), Andualem T Mengistu (International Monetary Fund), Andualem Mengistu (0000-0002-6822-2756, International Monetary Fund)
Year2024
Volume91
Issue363
Pages1100-1123
Publication date2024-07-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12535
OpenAlexW4399051690
LanguageEN
Citations received1
References cited28

We examine the spatial variation in variety of manufactured consumer goods to study how choice fades across space. We use data on 132 consumer goods and over 800 brands available from a purpose‐designed survey of fixed shops and periodic market stalls in towns and villages in Ethiopia. We find that local consumer choice fades, with fewer varieties in remoter villages. On average, these villages have approximately half the number of available items compared to their nearest market town. A fall in travel time of a half‐hour is associated with 4 extra goods and 9 brands. Variety also increases with inequality and market size. Furthermore, we estimate a model of heterogeneous consumers with a preference for variety and monopolistically competitive traders to disentangle the role of transport costs from the taste for variety, and to assess the consequences for prices. Our model estimates suggest that local consumer prices contain a markup of 8% above source town prices and transport costs. We demonstrate the significant costs to consumers from both low variety and high trade costs. Ignoring such costs means that poverty is underestimated in remote places. In turn, when infrastructure investments raise variety, the likely fall in poverty will be underestimated too

Business · Competition (biology) · Consumer choice · Economic growth · Economics · Economy · Goods and services · Microeconomics · Poverty · Preference · Revealed preference · Variety (cybernetics) · Economics of Agriculture and Food Markets · Global trade and economics · Marketing · Regional Economics and Spatial Analysis

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Unique citing works1
Citations per year1
Citation span2025 - 2025 (1)
Citation velocityrecent
Highly citedNo
Citation typesNeutral: 1

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