Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81515
Authors: 
Maican, Florin
Orth, Matilda
Year of Publication: 
2012
Series/Report no.: 
IFN Working Paper 898
Abstract: 
Entry of large (“big-box”) stores along with a drastic fall in the total number of stores is a striking trend in retail markets. We use a dynamic structural model to estimate retail productivity in a local market setting. In particular, we provide a general strategy of how to measure the causal effect of entry of large stores on productivity separate from demand. To control for endogeneity of large entrants, we use political preferences. Using detailed data on all retail food stores in Sweden, we find that large entrants force low productivity stores to exit and surviving stores to increase their productivity. Productivity increases most among incumbents in the bottom part of the productivity distribution, and then declines with the productivity level of incumbents. When controlling for prices, the impact of large entrants on productivity increases substantially. Our findings suggest that large entrants play a crucial role for driving productivity growth.
Subjects: 
Retail markets
Imperfect competition
Industry dynamics
Productivity
Dynamic structural model
JEL: 
C24
L11
O30
Document Type: 
Working Paper

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