The hypothesis in this paper is that the existence of retail markets may not necessarily be determined by spatial factors and increasing return in transportation (or increasing returns in retailing), but can be explained by the rational behaviour of firms operating in a stochastic environment....

This paper develops a theoretical framework in which the impact of different privatization strategies on the dynamics of the retail market in a transitional economy can be analyzed. The analysis shows that rational behavior of the monopolistic manufacturer under uncertainty of demand naturally...