Determinants of economies of scope in retail |
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| Institution: | 1. University of Gothenburg, CEPR, and Research Institute of Industrial Economics (IFN) Sweden;2. Research Institute of Industrial Economics (IFN), Box 55665, SE-102 15, Stockholm, Sweden;1. University of Milano, Department of Economics, Management, and Quantitative Methods Via Conservatorio, 7, Milano 20122, Italy;2. Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille AMSE, France;3. CEF.UP, University of Porto, Portugal;1. Toulouse School of Economics, Esplanade de l’Université 1, Toulouse 31080, France;3. Department of Economics and Business, University of Catania, C.so Italia 55, Catania 95129, Italy;4. Department of Economics and Related Studies, University of York, Heslington, York YO10 5DD, UK;5. Department of Economics/NIPE, University of Minho, Campus de Gualtar, Braga 4710-057, Portugal;6. Department of Economics, University of Bergen, Norway;1. Bologna University, Italy;2. Toulouse School of Economics, France;3. European University Institute, Italy;4. Centre for Economic Policy Research, CEPR, UK;1. Düsseldorf Institute for Competition Economics (DICE), Heinrich-Heine University Düsseldorf, Germany;2. Westfälische Wilhelms-University Münster, Germany;3. CERNA Mines ParisTech, France;1. Insper Institute of Education and Research (INSPER), Rua Quatá 300, São Paulo, SP, 04546-042, Brazil;2. University of São Paulo (USP), Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo (FEA-USP), Avenida Professor Luciano Gualberto 908, São Paulo, SP, 05508-010, Brazil;1. Lancaster University Management School, United Kingdom;2. Humboldt-Universität zu Berlin, Germany |
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| 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. |
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