Working Paper: NBER ID: w19797
Authors: Raffaella Sadun
Abstract: Regulations aimed at curbing the entry of large retail stores have been introduced in many countries to protect independent retailers. Analyzing a planning reform launched in the United Kingdom in the 1990s, I show that independent retailers were actually harmed by the creation of entry barriers against large stores. Instead of simply reducing the number of new large stores entering a market, the entry barriers created the incentive for large retail chains to invest in smaller and more centrally located formats, which competed more directly with independents and accelerated their decline. Overall, these findings suggest that restricting the entry of large stores does not necessarily lead to a world with fewer stores, but one with different stores, with uncertain competitive effects on independent retailers.
Keywords: Planning Regulation; Independent Retailers; Retail Competition
JEL Codes: K2; L10; L51; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| planning grants (O38) | employment growth in manufacturing sector (O14) |
| planning regulations (R52) | independent retailers (L81) |
| planning regulations (R52) | large retail stores (L81) |
| entry barriers (L13) | independent retailers (L81) |
| decrease in planning grants (H77) | employment growth for small chain formats (L81) |
| planning grants (O38) | local demand conditions (R22) |