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

See all articles by Boyoung Seo

Boyoung Seo

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: April 21, 2019

Abstract

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

Seo, Boyoung, Firm Scope and the Value of One-Stop Shopping in Washington State's Deregulated Liquor Market (April 21, 2019). Kelley School of Business Research Paper No. 16-70. Available at SSRN: https://ssrn.com/abstract=2863094 or http://dx.doi.org/10.2139/ssrn.2863094

Boyoung Seo (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-3667 (Phone)

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