The Amazon-Walmart Showdown That Explains the Modern Economy -
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With Amazon buying the high-end grocery chain Whole Foods, something retail analysts have known for years is now apparent to everyone:
The online retailer is on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.
Just as Walmart is using Bonobos to get access to higher-end consumers
and a more technologically savvy way of selling clothes, Amazon is using Whole Foods to get the expertise and physical presence it takes to sell fresh foods.
and four colleagues found in a recent paper that the rise of these “superstar firms” — the big winners in the kind of face-off
that Walmart and Amazon are now engaged in — is a likely explanation for the decrease in the share of the overall economic pie that is going to workers
Each one is trying to become more like the other — Walmart by investing heavily in its technology,
Amazon by opening physical bookstores and now buying physical supermarkets.
The apparel industry isn’t that extreme — the price of making a shirt is still linked to the cost of fabric
and the workers to do the stitching — but it is moving in that direction.
But more and more businesses in the modern economy, rather than reflecting those diminishing returns to scale,
show positive returns to scale: The biggest companies have a huge advantage over smaller players.