nal independent agents varies across compa- nies. Transportation companies, particularly the airlines, sell both through internal resources and through external retailers, including travel agents and Web-based merchants such as Orbitz, Travelocity, and Expedia. Thus, retail and wholesale functions tend to be separate from manufacturing. These examples suggest that the transaction costs of using the market tend to be less than the organizational costs of vertical integration into retailing. Some of the advantages of independent retailing stem from the fundamental differences between the activities required for interaction with customers and manufacturing activities. Retailers specialize in marketing, sales, and service, achieving expertise that comes with specialization and division of labor. Retailers obtain economies of scale and scope from large-scale distribution operations, including the operation of large retail stores. Manufacturers benefit from sales through multiple retailers, each of whom addresses different market segments by offering different locations, shopping expe- riences, price levels, selections of other products, degrees of convenience, and com- plementary services. Manufacturers can benefit from competition between retailers, which lowers retail margins to avoid double marginalization. Competition between retailers can increase customer service in some cases, although there is also the risk of a free-rider problem. If discount stores can free ride on customer information provided by specialty stores, then specialty stores will not be able to sustain the markups needed to support provision of information. Some of the benefits from independent retailing may not be readily available to network firms in telecommunications. The key reason is that the network firm continues to do many of the retailer's jobs. Thus, the network firm continues to perform all activities associated with delivering and distributing the service to the final customer. For example, a telecommunications company provides the r