Determinants of economies of scope in retail
Florin Maican and
International Journal of Industrial Organization, 2021, vol. 75, issue C
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.
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)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:75:y:2021:i:c:s0167718721000035
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