Retail Format as a Barrier to Entry

Abstract:     
Entry barriers to an industry may be located in the activities of related industries rather than in the focal industry itself. Specifically, we use an experiment conducted by the Swedish government alcohol monopoly in which a group of stores was converted from behind-the-counter to self-service sales. The format change is coincident with a significant drop in the concentration of sales across concentration measures and product categories. Further, new products do considerably better in self-service than in behind-the-counter stores. These results have broad implications for policies that require behind-the-counter sale of consumer products as commonly seen in tobacco, alcohol, and pharmaceuticals.

Keywords: barriers to entry, market concentration, retail, regulation

JEL Classifications: L10, L50

Working Paper Series