Determinants of Economies of Scope in Retail

Florin Maican and Matilda Orth

No 15084, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Economies of scope; Productivity; Retail; Product variety; Technology; Competition (search for similar items in EconPapers)
JEL-codes: L11 L13 L25 L81 M21 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-com and nep-cwa
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Related works:
Journal Article: Determinants of economies of scope in retail (2021)
Working Paper: Determinants of Economies of Scope in Retail (2020)
Working Paper: Determinants of Economies of Scope in Retail (2020)
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