Entry Barriers in Italian Retail Trade

47 Pages Posted: 20 Mar 2007

See all articles by Eliana Viviano

Eliana Viviano

Bank of Italy

Fabiano Schivardi

Luiss Guido Carli - Department of Economics and Finance; Einaudi Institute for Economics and Finance (EIEF); Centre for Economic Policy Research (CEPR)

Date Written: February 2007

Abstract

The 1998 reform of the Italian retail trade sector delegated to the regional governments the regulation of entry of large retail shops. We use the local variation in regulation to determine the effects of entry barriers on firm performance for a representative sample of medium and large retail outlets. Using a diff-in-diff approach, we find that entry barriers are associated with substantially higher profit margins and substantially lower productivity of incumbent firms. We also find that liberalizing entry has a positive effect on investment in ICT, which the recent literature has shown to be the main driver of the remarkable sectoral productivity growth in the US. Finally, in the most liberal regions yearly inflation in the CPI component "food and beverages" was approximately half a percentage point lower than in the other regions: higher productivity coupled with lower margins resulted in lower consumer prices.

Keywords: entry barriers, productivity growth, technology adoption, retail trade

JEL Classification: L5, L11, L81

Suggested Citation

Viviano, Eliana and Schivardi, Fabiano, Entry Barriers in Italian Retail Trade (February 2007). Bank of Italy Economic Research Paper No. 616, Available at SSRN: https://ssrn.com/abstract=970295 or http://dx.doi.org/10.2139/ssrn.970295

Eliana Viviano (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Fabiano Schivardi

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

Viale Romania 32
Rome, Rome 00187
Italy

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

Via Due Macelli, 73
Rome, 00187
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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