Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 6

Compared to online retailers, "brick-and-mortar" stores have the added expense of the physical space for consumers to see the items sold, but the ''touch factor'' may be important for consumers' shopping experience. Describe the potential problem raised by cannibalization of sales by online retailers. How might the manufacturer design contracts with online and ''brick-and-mortar'' retailers to prevent this problem? What are the other relative cost/quality advantages of one form of retailing over the other?