A dynamic analysis of entry regulations and productivity in retail trade

Abstract

Quantifying possible inefficiencies stemming from regulation is important to both policymakers and researchers. We use a dynamic structural model to evaluate the role of local market entry regulations in the productivity of retail trade. Our model is flexible with respect to how local market regulations influence store productivity and controls for demand in local markets. We combine the structural approach with detailed data on all stores in the Swedish retail industry. The results show that more liberal entry regulations increase future productivity and that the increase in productivity is larger for small stores and small markets than for large stores and large markets.

Productivity Dynamics and the Role of ‘Big‐Box’ Entrants in Retailing

“…Entry regulations are in effect in the OECD, although such regulations are much more restrictive in Europe than in the U.S . In Maican and Orth [], we find that more liberal entry regulations increase store productivity in the Swedish retail trade. Productivity is obviously an important object to study because it can be directly incorporated into a cost‐benefit analysis of the entry of new large stores.…”

“…The average persistence in productivity is approximately 0.745, which is consistent with previous findings on retail and manufacturing (Aw et al . [], Doraszelski and Jaumandreu [], Maican and Orth []). The findings also show that the remaining productivity shocks ( ξ jt ) have a lower variance in the nonlinear specification than in AR (1).…”

“… In a companion paper, we evaluate the effect of entry regulations on productivity in retail trade sectors other than food in Sweden (Maican and Orth []). The paper also relates to the vast literature on how competition affects productivity.…”

Do Private Utilities Outperform Local Government-Owned Utilities? Evidence from German Retail Electricity

“…Controlling for additional effects in the law of motion for productivity has been studied previously (De Loecker and Warzynski, 2012;Doraszelski and Jaumandreu, 2013;Maican and Orth, 2015). We imply that a change in the managerial strategy in response to a new owner takes at least one year to be implemented.…”

Productivity in Electricity Retail after Market Liberalisation: Analysing the Effects of Ownership and Firm's Governance Structure

“…We imply that a change in the managerial strategy in response to a new owner takes at least one year to be implemented. Controlling for additional effects in the law of motion for productivity has been studied previously (De Loecker and Warzynski, 2012;Doraszelski and Jaumandreu, 2013;Maican and Orth, 2015). Doraszelski and Jaumandreu, however, estimate endogenous productivity through R&D expenditure, whereas we assume that management does not directly control ownership status.…”