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One-Stop-Shopping hinders Specialization?

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  • Max Riegel

Abstract

I study how consumer preferences for one-stop-shopping affect the resource allocation of multiproduct firms. In many markets, consumers prefer to buy multiple products at a single seller. At the same time, multiproduct firms have to split their resources between their products, for instance by allocating R&D budgets or shelf space. One-stop-shoppers treat firms’ products as if offered as bundles. If there are only one-stop-shoppers, firms therefore cannot gain from a comparative advantage over a particular product. I show that firms become more inclined to specialize in different products and gain market power, as the share of one-stop-shoppers decreases. Thereby, industry profits rise, potentially to the detriment of consumers.

Suggested Citation

  • Max Riegel, 2025. "One-Stop-Shopping hinders Specialization?," CRC TR 224 Discussion Paper Series crctr224_2025_701, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_701
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp701
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    References listed on IDEAS

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    1. Klemperer, Paul, 1992. "Equilibrium Product Lines: Competing Head-to-Head May Be Less Competitive," American Economic Review, American Economic Association, vol. 82(4), pages 740-755, September.
    2. Carmen Matutes & Pierre Regibeau, 1988. ""Mix and Match": Product Compatibility without Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 221-234, Summer.
    3. Economides, Nicholas, 1989. "Desirability of Compatibility in the Absence of Network Externalities," American Economic Review, American Economic Association, vol. 79(5), pages 1165-1181, December.
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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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