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Shops and the city

Author

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  • Stan Veuger

    (American Enterprise Institute)

  • Daniel Shoag

Abstract

We report three findings: (1) Using evidence from chain bankruptcies and data on 12-18 million establishments per year, we show that large retailers produce significant positive spillovers. (2) Local governments respond to the size of these externalities. When a town's boundaries allow it to capture a larger share of retail spillovers, it is more likely to offer retail subsidies. (3) These subsidies crowd out private-sector mechanisms that also subsidize large retailers, such as shopping malls. These facts provide powerful evidence of the Coase theorem at work and highlight a concern for local development policies even when externalities can be targeted.

Suggested Citation

  • Stan Veuger & Daniel Shoag, 2014. "Shops and the city," AEI Economics Working Papers 416683, American Enterprise Institute.
  • Handle: RePEc:aei:rpaper:416683
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    References listed on IDEAS

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    Cited by:

    1. B├╝chel, Konstantin & Ehrlich, Maximilian v., 2018. "Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data," CAGE Online Working Paper Series 356, Competitive Advantage in the Global Economy (CAGE).
    2. Shai Bernstein & Emanuele Colonnelli & Xavier Giroud & Benjamin Iverson, 2017. "Bankruptcy Spillovers," NBER Working Papers 23162, National Bureau of Economic Research, Inc.
    3. Shai Bernstein & Emanuele Colonnelli & Xavier Giroud & Benjamin Iverson, 2017. "Bankruptcy Spillovers," Working Papers 17-16, Center for Economic Studies, U.S. Census Bureau.

    More about this item

    Keywords

    subsidies; retail;

    JEL classification:

    • A - General Economics and Teaching

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