Entry Barriers in Retail Trade

35 Pages Posted: 5 Jun 2008  

Fabiano Schivardi

Einaudi Institute for Economics and Finance (EIEF); Luiss Guido Carli - Department of Economics and Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Eliana Viviano

Bank of Italy

Multiple version iconThere are 2 versions of this paper

Date Written: January 2008

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.

Keywords: Entry barriers, productivity growth, technology

JEL Classification: L11, L5, L81

Suggested Citation

Schivardi, Fabiano and Viviano, Eliana, Entry Barriers in Retail Trade (January 2008). , Vol. , pp. -, 2008. Available at SSRN: https://ssrn.com/abstract=1140566

Fabiano Schivardi (Contact Author)

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

Luiss Guido Carli - Department of Economics and Finance ( email )

Viale Romania 32
Rome, Rome 00187
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Eliana Viviano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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