Sc. Michael, COMPETITION IN ORGANIZATIONAL FORM - MAIL-ORDER VERSUS RETAIL STORES,1910-1940, Journal of economic behavior & organization, 23(3), 1994, pp. 269-286
Competition between firms can occur through innovation in organization
al form, as each uses a distinctive institution to offer customers low
er prices and better services. This paper analyzes competition between
two institutions of retail trade, mail order and retail stores, durin
g the period 1910 to 1940. Transaction costs, specifically costs of ph
ysical distribution and costs of informing the customer, are shown to
make mail order more efficient at low customer densities and with prod
ucts that can be easily described. Regressions on time series data and
cross-section data confirm the theoretical propositions.