Managing product variety on platform: product market risk and scope economies

While millions of products are available on online retailing platforms, We investigate how a platform owner, facing product market risk and scope economies, may identify which products are worthwhile for itself selling (called reselling mode, purchasing products from manufacturers and selling them to consumers) and which ones are the best left for platform selling (on which manufacturers selling their products directly to consumers). Weather the reselling mode or platform mode is preferred depending on the magnitude of scope economies and product market risk. We show that the platform owner itself stocks and sells when the degree of scope economies is strong and the product market risk is low.