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Local retail prices, product variety and neighborhood change

Borraz, Fernando, Carozzi, Felipe ORCID: 0000-0002-0458-5531, Gonzalez Pampillon, Nicolas and Zipitría, Leandro (2024) Local retail prices, product variety and neighborhood change. American Economic Journal: Economic Policy, 16 (1). 1 - 33. ISSN 1945-7731

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Identification Number: 10.1257/pol.20210817

Abstract

We study how local grocery markets within a city are affected by changes in housing markets. Our empirical strategy exploits a shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. The introduction of new housing stock induced by the policy causes a reduction in grocery prices of 2.3 percent and an increase in locally available product varieties. Using insights from a multiproduct model of imperfect competition and estimates for different types of stores, we show these changes are the result of incumbents' response to an increase in local demand.

Item Type: Article
Official URL: https://www.aeaweb.org/journals/pol
Additional Information: © 2024 American Economic Association
Divisions: Geography & Environment
What Works Centre
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce
H Social Sciences
JEL classification: R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O18 - Regional, Urban, and Rural Analyses
L - Industrial Organization > L8 - Industry Studies: Services > L81 - Retail and Wholesale Trade; Warehousing; e-Commerce
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R22 - Other Demand
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R38 - Government Policies; Regulatory Policies
Date Deposited: 27 Jul 2023 23:24
Last Modified: 15 May 2024 17:09
URI: http://eprints.lse.ac.uk/id/eprint/119854

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