Firm Scope and the Value of One-Stop Shopping in Washington State's Deregulated Liquor Market
53 Pages Posted: 4 Nov 2016 Last revised: 7 May 2019
Date Written: April 21, 2019
Firm scope benefits consumers by allowing them to purchase multiple goods at once. This paper quantifies the consumer benefit of one-stop shopping and returns to firms as a result. Using retailer and household panel data, I exploit an exogenous change in firm scope in Washington State, which allowed liquor sales at grocery stores. I extend the standard method in the structural demand literature allowing for endogenous prices to the setting with complementary goods. The consumer benefit of one-stop shopping is estimated to 11% of liquor expenditure. A store gains 3.6% more grocery and 23% more liquor sales when selling both.
Keywords: one-stop shopping, firm scope, economies of scope, deregulation, privatization, liquor, alcohol, discrete choice demand
JEL Classification: L00, L50, L81, L66
Suggested Citation: Suggested Citation