> 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.
