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Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing

The entry of large (“big-box”) stores and the accompanying drastic decrease in the overall number of stores represent a striking trend in retail. We use a dynamic model to measure the impact of the entry of large stores on incumbents’ productivity separate from demand while accounting for local markets and the endogeneity of entry. Using data on all retail food stores in Sweden, we find that incumbents’ productivity increases after the entry of large stores and that the magnitude of the increase declines toward the upper part of the productivity distribution. Our findings highlight that large entrants play a crucial role in driving productivity.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 898.

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Length: 72 pages
Date of creation: 18 Jan 2012
Date of revision: 11 Dec 2014
Handle: RePEc:hhs:iuiwop:0898
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Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

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