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Entry barriers in Italian retail trade

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  • Fabiano Schivardi

    ()
    (Universita' di Cagliari)

  • Eliana Viviano

    ()
    (Banca dÂ’Italia)

Abstract

The 1998 reform of the Italian retail trade sector delegated to the regional governments the regulation of entry of large retail shops. We use the local variation in regulation to determine the effects of entry barriers on firm performance for a representative sample of medium and large retail outlets. Using a diff-in-diff approach, we find that entry barriers are associated with substantially higher profit margins and substantially lower productivity of incumbent firms. We also find that liberalizing entry has a positive effect on investment in ICT, which the recent literature has shown to be the main driver of the remarkable sectoral productivity growth in the US. Finally, in the most liberal regions yearly inflation in the CPI component “food and beverages” was approximately half a percentage point lower than in the other regions: higher productivity coupled with lower margins resulted in lower consumer prices.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 616.

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Date of creation: Feb 2007
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Handle: RePEc:bdi:wptemi:td_616_07

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Keywords: entry barriers; productivity growth; technology adoption; retail trade;

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References

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  1. Macdonald, G.M., 1988. "Competitive Diffusion," University of Chicago - Economics Research Center 88-10, Chicago - Economics Research Center.
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  16. Eugenio Gaiotti & Francesco Lippi, 2005. "Pricing behavior and the introduction of the euro: evidence from a panel of restaurants," Macroeconomics 0501029, EconWPA, revised 15 Feb 2005.
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Citations

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Cited by:
  1. Raffaella Sadun, 2008. "Does Planning Regulation Protect Independent Retailers?," CEP Discussion Papers dp0888, Centre for Economic Performance, LSE.
  2. Andrea Vaona & Guido Ascari, 2010. "Regional Inflation Persistence: Evidence from Italy," Working Papers 04/2010, University of Verona, Department of Economics.
  3. Raffaella Sadun, 2008. "Does planning regulation protect independent retailers?," LSE Research Online Documents on Economics 28503, London School of Economics and Political Science, LSE Library.
  4. Franco Amatori & Matteo Bugamelli & Andrea Colli, 2011. "Italian Firms in History: Size, Technology and Entrepreneurship," Quaderni di storia economica (Economic History Working Papers) 13, Bank of Italy, Economic Research and International Relations Area.
  5. Francesco Bripi, 2013. "The role of regulation on entry: evidence from the Italian provinces," Temi di discussione (Economic working papers) 932, Bank of Italy, Economic Research and International Relations Area.
  6. MATSUURA Toshiyuki & SUGANO Saki, 2009. "The Effect of Relaxation of Entry Restrictions for Large-Scale Retailers on SME Performance: Evidence from Japanese Retail Census," Discussion papers 09054, Research Institute of Economy, Trade and Industry (RIETI).

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