The Role of Merchant Wholesalers in Industrial Agglomeration Formation

Abstract

This paper explores the importance of merchant wholesalers in the early formation of industrial agglomerations. Merchant wholesalers reduce the size constraint of local markets by extending an entrepreneur's market reach. The merchant wholesale function also facilitates the formation of the division of labor by allowing greater local specialization. Merchant wholesalers are hypothesized t o be part of the complex formation process. In the early stage o f a complex's development, these intermediaries trade-in from outside as local demand warrants. Over time, local wholesale functions unfold. As a complex grows, these wholesalers specialize, creating a range of wholesale operations. The process of merchant wholesaler formation is thought to be dialectical; prior generations of technology lay the basis of subsequent merchant wholesale specializations. A model of wholesale evolution is presented and tested, based on a case study of firms in Austin, Texas. HE emergence of new innovative industry complexes has resulted in a growing body of research exploring their causes -and consequences. Three strands of theorizing stand out in the literature. At the interregional level, the seedbed shift hypothesis suggests that product cycle forces and diminished seedbed capacity resulted in a cumulative shift of innovative industries toward the US. Sunbelt. initial branch plant relocation was followed by a process of "in-filling" which

The transport geography of logistics and freight distribution

“…The latter is probably the only logistics subject that received major reference from academic geography. Other core spatial implications of distribution and logistics have been directly addressed in geography by few authors who developed an insight into wholesale activities and their geographical distribution (Glasmeier, 1992;McKinnon, 1983McKinnon, , 1988McKinnon, , 1998Riemers, 1998;Vance, 1970). Following the nature of retailing as an originally distributive activity, geographic research on retail and consumption is of interest in the logistics context too.…”

A missing link:the relationship between distribution and industrial compled formation*

“…The empirical results presented in the following section were originally published in the Anmk ofthe Association ofAmerican fhpaphers as part of a larger study of wholesaling's role in regional industrial complex formation (Glasmeier, 1990). The original article presents a number of important insights about firm's selection of distribution channehr.…”

“…Thus initially, wholesalel-s operate from outside a frontier location -only relocating when the scale of local demand achieves sufficient size to warrant a stocking location (Glasmeier 1990)".11 Based on Meyer's model, the wholesaler originates in the metropolitan agglomeration closest to the frontier and operates over a large area.12 As demand at the frontier location grows, local stocking (meaning stocking by the outside distributor or by a local entrepreneur-distributor) takes place. For local stocking to be efficient, the new wholesaler must provide general material supplies.…”

“…And as we are specifically concerned with complexes whose industrial bases consist of high technology industries, 'it must be stated at the outset that the market for such products is non-local in nature' (see Glasmeier, 1990 for additional citations). Unless it is produced as a subcontract or commissioned as a one-of-a-kind product, a specialized product quickly exhausts local markets.…”

Agglomeration, Industrial Districts and Industry Clusters: Trends of the 21st Century Literature

“…Bergsman et al, 1972;Rykiel, 1984;Park and Markusen, 1995) and relational structures (e.g. Glasmeier, 1990;Rabellotti and Schmitz, 1999) that yield these benefits.…”