I would think the decentralised approach would always be able to compete when we factor in transportation costs which usually make up a pretty significant percentage of the actual sales price with centralised mass production. Much more of the money stays in the local economies too.
> I would think the decentralised approach would always be able to compete when we factor in transportation costs which usually make up a pretty significant percentage of the actual sales price with centralised mass production.
For non-perishable goods they are actually much less than people generally think. For a benchmark, shipping t-shirts from Hong Kong to LA in bulk costs less than 5c each. The total transportation costs of a system is completely dominated by the last leg of the route, where things are shipped in the least quantity. Typically, if someone walks half a kilometer to pick a good from a store, the energy cost of that is more than all the transportation costs up to that point, regardless of where the good was made.
Given that, the centralized approach only needs to be a few percent more efficient than the decentralized one to completely bury it. That is usually achievable.
This is true if companies are allowed to externalize costs. Down the line, however, someone's gotta pay the externalities. Usually the future generation. One can delay this, but it will catchup eventually. One manifestation is borrowing assets from an unrealizable future.
This is not to say local loops are externality free, but I conjecture they are more information-efficient and likely to get corrected quicker.
I think looking at the supply-side is the wrong approach. There's probably some factory in China churning out pads for half the cost, absorbing more of the transport cost.
The real genius here is the local factor. We're talking Mary Kay ladies selling sanitary pads. The power of local communities to change behavior and move product is incredible, especially in places where people actually talk to each other. Americans learn about paper towels from TV. If you can't afford a TV, you're talking to people more, and that's a more more valuable channel to engage folks.
End of the day, the product is cheap enough, but there is a powerful incentive to sell, and that's the real magic.
For non-perishable goods they are actually much less than people generally think. For a benchmark, shipping t-shirts from Hong Kong to LA in bulk costs less than 5c each. The total transportation costs of a system is completely dominated by the last leg of the route, where things are shipped in the least quantity. Typically, if someone walks half a kilometer to pick a good from a store, the energy cost of that is more than all the transportation costs up to that point, regardless of where the good was made.
Given that, the centralized approach only needs to be a few percent more efficient than the decentralized one to completely bury it. That is usually achievable.