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Determinants of Economies of Scope in Retail

Author

Listed:
  • Maican, Florin

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Orth, Matilda

    (Research Institute of Industrial Economics)

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 multi- product 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 of all product categories. Stores with high demand shocks specialize in fewer product categories and sell more top-selling product categories. Policy simulations show that investments in technology increase the extensive and intensive product margins, especially benefitting stores in urban markets because of their productivity advantage. Learning from demand to increase productivity and variety is crucial in rural markets. Reducing the role of uncertainty in both productivity and demand shocks endorses product variety and raises sales and market share.

Suggested Citation

  • Maican, Florin & Orth, Matilda, 2020. "Determinants of Economies of Scope in Retail," Working Papers in Economics 791, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0791
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    Cited by:

    1. is not listed on IDEAS
    2. Forsbacka, Tove & Le Coq, Chloé & Marvão, Catarina, 2023. "Cartel birth and death dynamics: Empirical evidence," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    3. Mehdi Shamohammadi, 2024. "Determining scale and scope economies in Korean private universities: an input distance function approach," Scientometrics, Springer;Akadémiai Kiadó, vol. 129(5), pages 2583-2613, May.

    More about this item

    Keywords

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    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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