Watermelon scale economies (Optional)
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It is amazing how cheap scale economies make a lot of our food. This story is taken from my personal experience buying watermelons in Mexico.
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Are the people in the Mexican village willing to pay 3+ days' wages for a watermelon because it's considered a luxury good? (Think: champagne) Or does everyone grow their own watermelons so they're only sold to visitors to the village? (Think: hotel taxes in FL or NYC) It seems to me there must be more to this story because watermelons are fairly productive and easy to grow and spending 3+ days' wages on a large piece of fruit doesn't strike me as sustainable.
Same here. Economies of scale are an impressive phenomenon but I plead for Occam's razor on this one.
Also in my personal experience, transparent fixed prices are one of mass retail's major contributions and outside of that specific channel, economists, just as consumers, get charged prices according to many factors, including of course general familiarity with local prices. Once you are familiar with these prices, no single producer or traditional reseller will be more expensive than a supermarket.
Counter-examples abound. Urban small-scale certified fair trade organic rice bought in Vientiane (Laos) is cheaper than mass marketed rice bought at Tesco 20 km away in Thailand despite lower costs and lower taxes in the Kingdom of Smiles. Roadside farmer's produce will cost a tenth of the price of supermarket produce in rural France, etc. As a general intermediaries are very expensive and their "raison d'être" most often isn't lowering prices but providing other services, such as ease of purchase (one-stop shopping), transport, etc.