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
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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
Land use regulation; regulatory costs; firm productivity; retail;
Find related papers by JEL classification:
- 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, Production Analysis, and Firm Location - - - Other 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)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
- 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).
- Cheshire, Paul C. & Hilber, Christian & Kaplanis, Ioannis, 2012.
"Land use regulation and productivity - Land matters: Evidence from a UK Supermarket chain,"
2072/196650, Universitat Rovira i Virgili, Department of Economics.
- 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.
- Crafts, Nicholas, 2012. "Creating Competitive Advantage: Policy Lessons from History," CAGE Online Working Paper Series 90, Competitive Advantage in the Global Economy (CAGE).
- 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.
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