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Barriers to retail competition and prices: evidence from Spain

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  • Alexander W. Hoffmaister

Abstract

Why do prices in Spain's regions fail to converge? The prime suspects for this puzzling result are differences in regional barriers to entry in retail distribution. This paper develops a Cournot-Nash model of imperfect competition to illustrate the effect of barriers on prices. A unique data set--derived from an extensive analysis of competition policies in Spain--provides evidence that barriers to entry increase regional prices. The evidence also suggests that, consistent with the model's predictions, barriers to entry raise prices up to a point, and thus indicate that barriers have a threshold effect on prices. Copyright 2010 Oxford University Press 2009 All rights reserved, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/oep/gpp035
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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 62 (2010)
Issue (Month): 2 (April)
Pages: 395-416

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Handle: RePEc:oup:oxecpp:v:62:y:2010:i:2:p:395-416

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Cited by:
  1. Luis Orea, 2010. "The effect of legal barriers to entry in the Spanish retail market: a local market approach," Hacienda Pública Española, IEF, vol. 193(2), pages 49-74, June.
  2. M.ª de los Llanos Matea & Juan S. Mora, 2009. "Developments in retail trade regulation in Spain and their macroeconomic implications," Banco de Espa�a Working Papers 0908, Banco de Espa�a.

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