Give arguments for and against wholesaler. Should the wholesalers be eliminated ?

Or

If the wholesaler is eliminated, what difficulties do you think the manufacturer have to face ?

 1. Arguments is favour of eliminating wholesalers :

(a) Increase in Price : The unnecessary presence of wholesaler between producer and consumers increases the prices of the commodity for the consumers. If there is direct contact between producer and consumers, the price will be lesser.

(b) Monopoly in the distribution : The wholesaler purchases bulk of the product, sometime all the product of the manufacturer, stored in his godwon and practically he becomes the monopolist. Thus, he exploits the consumer by restricted supply of goods.

(c) Creating artificial scarcity : The wholesaler stores the bulk of the commodity in his godown blocks the flow of goods and creators artificial scarcity of goods which result in the rise of price.

2. Argument in favour of continuing wholesaler :

(a) Financing the production : The wholesaler finances the producer by making advance payment. He also help the retailers by selling goods on credit. In his absence financing will suffer.

(b) Encouraging specialisation : The wholesaler collects the goods and classifies them in different grades, standardises and packages them. Specialisation will suffer with the removal of wholesalers.

(c) Supplying variety of goods : The wholesaler deals in one commodity and keeps different varieties of the same commodity. It will not be possible to keep so much varieties by producers other than wholesalers.

Hence, we can say that middlemen are required for the smooth flow of goods and services from producers to consumers but their activities should be controlled either by government machinery or voluntary associations.