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Entry barriers in Italian retail trade

Author

Listed:
  • Fabiano Schivardi

    (Universita' di Cagliari)

  • Eliana Viviano

    (Banca d�Italia)

Abstract

The 1998 reform of the Italian retail trade sector delegated to the regional governments the regulation of entry of large retail shops. We use the local variation in regulation to determine the effects of entry barriers on firm performance for a representative sample of medium and large retail outlets. Using a diff-in-diff approach, we find that entry barriers are associated with substantially higher profit margins and substantially lower productivity of incumbent firms. We also find that liberalizing entry has a positive effect on investment in ICT, which the recent literature has shown to be the main driver of the remarkable sectoral productivity growth in the US. Finally, in the most liberal regions yearly inflation in the CPI component �food and beverages� was approximately half a percentage point lower than in the other regions: higher productivity coupled with lower margins resulted in lower consumer prices.

Suggested Citation

  • Fabiano Schivardi & Eliana Viviano, 2007. "Entry barriers in Italian retail trade," Temi di discussione (Economic working papers) 616, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_616_07
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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2007/2007-0616/en_tema_616.pdf
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    Cited by:

    1. Andrea Brandolini & Piero Casadio & Piero Cipollone & Marco Magnani & Alfonso Rosolia, 2007. "Employment Growth in Italy in the 1990s: Institutional Arrangements and Market Forces," AIEL Series in Labour Economics, in: Nicola Acocella & Riccardo Leoni (ed.), Social Pacts, Employment and Growth. A Reappraisal of Ezio Tarantelli’s Thought, edition 1, chapter 4, pages 31-68, AIEL - Associazione Italiana Economisti del Lavoro.
    2. Enrico Santarelli & Martin Carree & Ingrid Verheul, 2009. "Unemployment and Firm Entry and Exit: An Update on a Controversial Relationship," Regional Studies, Taylor & Francis Journals, vol. 43(8), pages 1061-1073.
    3. Migliardo, Carlo, 2012. "Heterogeneity in price setting behavior, spatial disparities and sectoral diversity: Evidence from a panel of Italian firms," Economic Modelling, Elsevier, vol. 29(4), pages 1106-1118.
    4. Raffaella Sadun, 2015. "Does Planning Regulation Protect Independent Retailers?," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 983-1001, December.
    5. MATSUURA Toshiyuki & SUGANO Saki, 2009. "The Effect of Relaxation of Entry Restrictions for Large-Scale Retailers on SME Performance: Evidence from Japanese Retail Census," Discussion papers 09054, Research Institute of Economy, Trade and Industry (RIETI).
    6. Franco Amatori & Matteo Bugamelli & Andrea Colli, 2011. "Italian Firms in History: Size, Technology and Entrepreneurship," Quaderni di storia economica (Economic History Working Papers) 13, Bank of Italy, Economic Research and International Relations Area.
    7. Francesco Bripi, 2016. "The Role of Regulation on Entry: Evidence from the Italian Provinces," The World Bank Economic Review, World Bank, vol. 30(2), pages 383-411.
    8. Andrea Vaona & Guido Ascari, 2012. "Regional Inflation Persistence: Evidence from Italy," Regional Studies, Taylor & Francis Journals, vol. 46(4), pages 509-523, June.

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    More about this item

    Keywords

    entry barriers; productivity growth; technology adoption; retail trade;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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