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Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing

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Author Info

  • Maican, Florin

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Orth, Matilda

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

Entry of large (“big-box”) stores along with a drastic fall in the total number of stores is a striking trend in retail markets. In this paper we provide a dynamic structural model, controlling for unobserved prices and local market characteristics, to estimate total factor productivity in retail markets. Then we evaluate how increased competition from large entrants influences incumbents’ productivity in local markets. Using detailed data on retail food stores in Sweden, we find that net entry substantially contributes to industry productivity growth. In local markets, productivity dispersion increases as a consequence of large entrants, i.e., low productive incumbents become less productive whereas high productive incumbents become more productive. We conclude that large entrants play a central role in explaining productivity differences across stores.

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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 328.

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Length: 53 pages
Date of creation: 12 Nov 2008
Date of revision:
Handle: RePEc:hhs:gunwpe:0328

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research

Keywords: Retail markets; Imperfect competition; Industry dynamics; TFP; Space productivity; Dynamic structural model;

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References

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Cited by:
  1. Maican, Florin & Orth, Matilda, 2012. "A Dynamic Analysis of Regulation and Productivity in Retail Trade," Working Paper Series 939, Research Institute of Industrial Economics.
  2. Maican, Florin G., 2012. "From Boom to Bust and Back Again: A dynamic analysis of IT services," Working Papers in Economics 543, University of Gothenburg, Department of Economics.

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