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Entry Barriers in Retail Trade

  • Fabiano Schivardi

    (Università di Cagliari and EIEF)

  • Eliana Viviano

    (Bank of Italy)

The 1998 reform of the Italian 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. Finally, more stringent entry regulation leads to higher inflation: lower productivity coupled with larger margins results in higher consumer prices.

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Paper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 0814.

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Length: 41 pages
Date of creation: 2008
Date of revision: Jul 2008
Handle: RePEc:eie:wpaper:0814
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  1. Eliana Viviano, 2006. "Entry regulations and labor market outcomes: evidence from the Italian retail trade sector," Temi di discussione (Economic working papers) 594, Bank of Italy, Economic Research and International Relations Area.
  2. Nicoletti, Giuseppe & Ardagna, Silvia & Alesina, Alberto & Schiantarelli, Fabio, 2005. "Regulation and Investment," Scholarly Articles 2579825, Harvard University Department of Economics.
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  12. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
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  17. Raffaella Sadun, 2015. "Does Planning Regulation Protect Independent Retailers?," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 983-1001, December.
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  21. Jerry Hausman & Ephraim Leibtag, 2005. "Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart," NBER Working Papers 11809, National Bureau of Economic Research, Inc.
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  23. Robert J. Gordon, 2004. "Why was Europe Left at the Station When America's Productivity Locomotive Departed?," NBER Working Papers 10661, National Bureau of Economic Research, Inc.
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  26. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
  27. Sanghoon Ahn, 2002. "Competition, Innovation and Productivity Growth: A Review of Theory and Evidence," OECD Economics Department Working Papers 317, OECD Publishing.
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