Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240529 
Year of Publication: 
2021
Series/Report no.: 
IFN Working Paper No. 1386
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
This paper estimates a dynamic model of store adjustments in product variety that considers multiproduct service technology to evaluate the impact of entry regulations on variety and long-run profits in Swedish retail. Using rich data on stores and product categories, we find that more liberal entry regulation increases productivity and decreases the adjustment costs of variety. Counterfactual simulations of modest liberalizations of entry incentivize incumbents to offer more product categories to consumers while increasing efficiency and long-run profits. Regional differences are reduced as consumers and incumbents obtain more benefits in markets with restrictive regulation. Generous liberalizations of entry induce net exit of product categories and harm incumbents in markets with limited demand.
Subjects: 
Retail markets
Entry regulation
Product variety
Productivity
Competition
JEL: 
L11
L13
L81
Document Type: 
Working Paper

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