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Barriers to Retail Competition and Prices

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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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/231.

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Length: 41
Date of creation: 01 Oct 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/231

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Keywords: Prices; Economic models; barriers to entry; statistics; significance level; cointegration; imperfect competition; wage convergence; estimation procedure; competition policies; trade barriers; linear model; econometrics; zero profits; international trade; time series; equation; survey; significance levels; empirical model; market entry; increasing competition; open economy; statistically significant effect; dynamic impact; linear models; world economy; prediction; predictions; sample mean; hypothesis testing; income convergence; trade costs; estimation technique;

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References

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Cited by:
  1. 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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