Does planning regulation protect independent retailers?

Sadun, Raffaella (2008) Does planning regulation protect independent retailers? CEP Discussion Paper (888). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Entry regulations against big-box retailers have been introduced in many countries to protect smaller independent stores. Using a new dataset from the UK, I show that in fact these entry regulations have been associated with greater employment declines in independent stores they were meant to protect. The reason is that when large retail chains are prevented from entering a new area with a big-box store, they typically enter instead using a smaller in-town store format. These smaller format stores compete more directly with independent stores. To causally identify this impact I use the changing nature of local political control in the UK from 1993 to 2003. Since local politicians directly control planning regulation in the UK, and political parties have very different views on the ideal amount of planning control, this provides exogenous variation in the ease of entry for big-box retailers. I estimate that 15% of the employment decline experienced by independent retailers between 1998 and 2004 can be attributed to the perverse effect of planning regulation.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2008 The author
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor
JEL classification:	L - Industrial Organization > L8 - Industry Studies: Services > L81 - Retail and Wholesale Trade; Warehousing; e-Commerce L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation K - Law and Economics > K2 - Regulation and Business Law
Date Deposited:	02 Jul 2010 16:00
Last Modified:	11 Dec 2024 18:53
URI:	http://eprints.lse.ac.uk/id/eprint/28503

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