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Entry Barriers in Retail Trade

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  • Schivardi, Fabiano
  • Viviano, Eliana

Abstract

The 1998 reform of the Italy's retail trade sector delegated the regulation of entry of large stores to the regional governments. We use the local variation in regulation to determine the effects of entry barriers on firms' performance for a representative sample of retailers. We address the endogeneity of entry barriers through local fixed effects and using political variables as instruments. We also control for differences in trends and for area-wide shocks. We find that entry barriers are associated with substantially larger profit margins and substantially lower productivity of incumbent firms. Liberalizing entry has a positive effect on investment in ICT. Consistently, more stringent entry regulation results in higher inflation: lower productivity coupled with larger margins results in higher consumer prices.

Suggested Citation

  • Schivardi, Fabiano & Viviano, Eliana, 2008. "Entry Barriers in Retail Trade," CEPR Discussion Papers 6637, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6637
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    More about this item

    Keywords

    Entry barriers; Productivity growth; Technology;
    All these keywords.

    JEL classification:

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

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