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Public Transportation and Consumer Prices: Chain Stores, Street Vendors and Mom and Pop Stores

Author

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  • Angel Espinoza E.

Abstract

Improving public transport infrastructure changes local market conditions. In this paper, I examine the impact of the construction and operation of "Metrobus", Mexico City's Bus Rapid Transit (BRT) system on consumer prices in chain stores, street vendors, and small family-owned (mom and pop) stores. I do so through a panel event study design. I consider the construction and operation of BRT as two different phenomena; while the former is associated to street closures, the latter reduces transportation costs. I show that only prices in mom and pop stores respond to changes in local market conditions produced by the introduction of BRT. For these businesses, construction pressures prices downwards; in contrast, operation is associated with partial price recoveries. I cannot reject a null effect in prices from chain stores or street vendors.

Suggested Citation

  • Angel Espinoza E., 2024. "Public Transportation and Consumer Prices: Chain Stores, Street Vendors and Mom and Pop Stores," Working Papers 2024-02, Banco de México.
    • Handle: RePEc:bdm:wpaper:2024-02
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7B1EB76275-6AC3-24F8-FEDD-052D170D74BE%7D.pdf
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    More about this item

    Keywords

    Public Transportation; Local Markets; Price Formation;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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