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Determinants of economies of scope in retail

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  • Maican, Florin
  • Orth, Matilda

Abstract

This paper studies the determinants of economies of scope and quantifies their impact on the extensive and intensive product margins in retail. We use a framework based on a multiproduct technology to model stores’ incentives to expand product variety. Using novel Swedish data on product categories and stores, we find that high-productivity stores offer more product categories and sell more products of all categories. Stores with high-demand shocks specialize in fewer product categories and sell more products of top-selling categories. Policy simulations of regional programs that target the determinants of economies of scope show that investment subsidies and mentoring support for low-productivity stores increase the number of product categories and sales per product category, especially benefiting stores in rural markets.

Suggested Citation

  • Maican, Florin & Orth, Matilda, 2021. "Determinants of economies of scope in retail," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:indorg:v:75:y:2021:i:c:s0167718721000035
    DOI: 10.1016/j.ijindorg.2021.102710
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    More about this item

    Keywords

    Economies of scope; Productivity; Retail; Product variety; Technology; Competition;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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