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Local retail prices, product variety and neighborhood change

Author

Listed:
  • Borraz, Fernando
  • Carozzi, Felipe
  • Gonzalez Pampillon, Nicolas
  • Zipitría, Leandro

Abstract

We study how local grocery markets within a city are affected by changes in housing markets. Our empirical strategy exploits a shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. The introduction of new housing stock induced by the policy causes a reduction in grocery prices of 2.3 percent and an increase in locally available product varieties. Using insights from a multiproduct model of imperfect competition and estimates for different types of stores, we show these changes are the result of incumbents' response to an increase in local demand.

Suggested Citation

  • Borraz, Fernando & Carozzi, Felipe & Gonzalez Pampillon, Nicolas & Zipitría, Leandro, 2024. "Local retail prices, product variety and neighborhood change," LSE Research Online Documents on Economics 119854, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:119854
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    File URL: https://researchonline.lse.ac.uk/id/eprint/119854/
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    References listed on IDEAS

    as
    1. Xavier Jaravel, 2018. "What Is the Impact of Food Stamps on Prices and Products Variety? The Importance of the Supply Response," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 557-561, May.
    2. Baum-Snow, Nathaniel & Hartley, Daniel, 2020. "Accounting for central neighborhood change, 1980–2010," Journal of Urban Economics, Elsevier, vol. 117(C).
    3. Xavier Jaravel, 2019. "The Unequal Gains from Product Innovations: Evidence from the U.S. Retail Sector," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 715-783.
    4. Fernando Borraz & Alberto Cavallo & Roberto Rigobon & Leandro Zipitria, 2016. "Distance and Political Boundaries: Estimating Border Effects under Inequality Constraints," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 3-35, January.
    5. Jessie Handbury & Sarah Moshary, 2021. "School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program," NBER Working Papers 29384, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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