Working Paper No. 1247

Determinants of Economies of Scope in Retail

Published: November 8, 2018, revised August 2019Pages: 61Keywords: Economies of scope; Product variety; Productivity; Inventory; Demand; CompetitionJEL-codes: L11; L13; L25; L81; M21

Determinants of Economies of Scope in Retail Florin Maican and Matilda Orth


This paper studies the determinants of economies of scope in retail using a dynamic framework and novel product and store data. We estimate store productivity and consumers’ perceived shopping quality and analyze their relationship with intensive and extensive product margins, performance and welfare. We find that high productivity stores offer more products and sell more of each product. High quality stores offer fewer products
and sell more of top products. Counterfactual experiments show that productivity innovations increase product variety, especially when demand uncertainty is low and in the long run. Higher shopping quality increases consumer surplus even if stores specialize.

 

 

 

Matilda Orth

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Ph: +46 8 665 45 31
Mob: +46 736 42 38 24
matilda.orth@ifn.se

Florin Maican

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Ph: +46 31 786 4866
Mob: +46 76 235 3039
florin.maican@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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