International Trade and Retail Market Performance and Structure: Theory and Empirical Evidence

67 Pages Posted: 8 Aug 2018

See all articles by Philipp Meinen

Philipp Meinen

Deutsche Bundesbank

Horst Raff

Christian-Albrechts-Universitaet zu Kiel; CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

Multiple version iconThere are 2 versions of this paper

Date Written: June 18, 2018

Abstract

Based on a theoretical model featuring heterogeneous retailers that may source globally and operate as chains, we derive a number of hypotheses that link trade integration to retail firm performance and to the structure of retail markets. We empirically test these predictions using Danish microdata for the period 1999 to 2008. We find that importing retailers are larger, more profitable, and have a higher propensity to have multiple shops than domestically sourcing firms. While this is partly due to self-selection, we also present evidence for improved perfor-mance caused by firms’ importing activities. Moreover, we find that retail imports are associated with a higher exit probability of small retailers and greater local retail market concentration. Overall, we obtain support for the model’s predictions and argue that the observed adjustments may imply additional gains from trade absent from models lacking a distribution sector.

Keywords: international trade, consumer goods, retailing, retail chains, market concentration

JEL Classification: F120, L110

Suggested Citation

Meinen, Philipp and Raff, Horst, International Trade and Retail Market Performance and Structure: Theory and Empirical Evidence (June 18, 2018). CESifo Working Paper Series No. 7099, Available at SSRN: https://ssrn.com/abstract=3228385

Philipp Meinen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Horst Raff (Contact Author)

Christian-Albrechts-Universitaet zu Kiel ( email )

Institut fur Volkswirtschaftslehre
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Kiel, 24098
Germany
+49-431-880-1582 (Phone)
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Kiel Institute for the World Economy ( email )

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