Evaluating the Effects of Planning Policies on the Retail Sector: Or do Town Centre First Policies Deliver the Goods?
AbstractFew studies conceive of land as a productive factor but British land use policies may lower total factor productivity (TFP) in the retailing industry by (i) restricting the total availability of land for retail, thereby increasing space costs (ii) directly limiting store size and (iii) concentrating retail development on specific central locations. We use unique store-specific data to estimate the impact of space on retail productivity and the specific effects of planning restrictiveness and micromanagement of store locations. We use the quasi natural experiment generated by the variation in planning policies between England, Wales, Scotland and Northern Ireland to isolate the impact of town centre first policies. We find that TFP rises with store size and that planning policy directly reduces productivity both by reducing store sizes and forcing retail onto less productive sites. Our results, while they strictly only apply to the supermarket group whose data we analyse, are likely to be representative of supermarkets in general and suggest that since the late 1980s planning policies have imposed a loss of TFP of at least 20%.
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Bibliographic InfoPaper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0066.
Date of creation: Jan 2011
Date of revision:
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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
Land use regulation; regulatory costs; firm productivity; retail;
Other versions of this item:
- Paul Cheshire & Christian A. L. Hilber & Ioannis Kaplanis, 2011. "Evaluating the effects of planning policies on the retail sector: or do town centre first policies deliver the goods?," LSE Research Online Documents on Economics 31757, London School of Economics and Political Science, LSE Library.
- D2 - Microeconomics - - Production and Organizations
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-03-26 (Agricultural Economics)
- NEP-ALL-2011-03-26 (All new papers)
- NEP-EFF-2011-03-26 (Efficiency & Productivity)
- NEP-REG-2011-03-26 (Regulation)
- NEP-URE-2011-03-26 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Paul Cheshire & Christian A.L. Hilber, 2007. "Office space supply restrictions in Britain: the political economy of market revenge," LSE Research Online Documents on Economics 3203, London School of Economics and Political Science, LSE Library.
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- Paul Cheshire & Christian A.L. Hilber, 2008. "Office space supply restrictions in Britain: the political economy of market revenge," LSE Research Online Documents on Economics 4372, London School of Economics and Political Science, LSE Library.
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- Paul Cheshire & Christian A. L. Hilber & Ioannis Kaplanis, 2013.
"Land Use Regulation and Productivity - Land Matters: Evidence from a UK Supermarket Chain,"
SERC Discussion Papers
0138, Spatial Economics Research Centre, LSE.
- Cheshire, Paul C. & Hilber, Christian & Kaplanis, Ioannis, 2012. "Land use regulation and productivity - Land matters: Evidence from a UK Supermarket chain," Working Papers 2072/196650, Universitat Rovira i Virgili, Department of Economics.
- Gabriel Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2013.
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ERSA conference papers
ersa13p87, European Regional Science Association.
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- repec:cge:warwcg:90 is not listed on IDEAS
- Max Nathan & Henry G. Overman, 2011. "What We Know (and Don't Know) About the Links between Planning and Economic Performance," SERC Policy Papers 010, Spatial Economics Research Centre, LSE.
- Paul C. Cheshire & Christian A. L. Hilber & Ioannis Kaplanis, 2012. "Evidence from a UK supermarket chain," Working Papers 2012/15, Institut d'Economia de Barcelona (IEB).
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