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Does Planning Regulation Protect Independent Retailers?

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  • Raffaella Sadun

Abstract

Regulations aimed at curbing the entry of large retail stores have been introduced in many countries to protect independent retailers. Analyzing a planning reform launched in the United Kingdom in the 1990s, I show that independent retailers were actually harmed by the creation of entry barriers against large stores. Instead of simply reducing the number of new large stores entering a market, the entry barriers created the incentive for large retail chains to invest in smaller and more centrally located formats, which competed more directly with independents and accelerated their decline. Overall, these findings suggest that restricting the entry of large stores does not necessarily lead to a world with fewer stores, but one with different stores, with uncertain competitive effects on independent retailers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19797.

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Date of creation: Jan 2014
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Handle: RePEc:nbr:nberwo:19797

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  1. Draca, Mirko & Machin, Stephen & Van Reenen, John, 2006. "Minimum Wages and Firm Profitability," IZA Discussion Papers 1913, Institute for the Study of Labor (IZA).
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Cited by:
  1. Maican, Florin & Orth, Matilda, 2012. "Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing," Working Paper Series 898, Research Institute of Industrial Economics.
  2. Dan Corry & Anna Valero & John Van Reenen, 2011. "UK Economic Performance Since 1997: Growth, Productivity and Jobs," CEP Special Papers 24, Centre for Economic Performance, LSE.
  3. Jonathan Haskel & Raffaella Sadun, 2012. "Regulation and UK Retailing Productivity: Evidence from Microdata," Economica, London School of Economics and Political Science, vol. 79(315), pages 425-448, 07.
  4. 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).
  5. Eliana Viviano & Luciana Aimone Gigio & Emanuela Ciapanna & Daniele Coin & Fabrizio Colonna & Federica Lagna & Raffaele Santioni, 2012. "The retail trade sector and the food industry in Italy," Questioni di Economia e Finanza (Occasional Papers) 119, Bank of Italy, Economic Research and International Relations Area.
  6. Susanne Prantl & Alexandra Spitz-Oener, 2009. "How does entry regulation influence entry into self-employment and occupational mobility?," IFS Working Papers W09/14, Institute for Fiscal Studies.
  7. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2014. "Supermarket Entry and the Survival of Small Stores," Review of Industrial Organization, Springer, vol. 44(1), pages 73-93, February.
  8. 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.
  9. Susanne Prantl, 2012. "The impact of firm entry regulation on long-living entrants," Small Business Economics, Springer, vol. 39(1), pages 61-76, July.
  10. Maican, Florin & Orth, Matilda, 2012. "A Dynamic Analysis of Regulation and Productivity in Retail Trade," Working Paper Series 939, Research Institute of Industrial Economics, revised 12 Apr 2014.
  11. Wouter Vermeulen & Christian A.L. Hilber, 2012. "The Impact of Supply Constraints on House Prices in England," CPB Discussion Paper 219, CPB Netherlands Bureau for Economic Policy Analysis.
  12. 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.
  13. Horst Raff & Nicolas Schmitt, 2012. "Imports and the structure of retail markets," Canadian Journal of Economics, Canadian Economics Association, vol. 45(4), pages 1431-1455, November.

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