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Working Paper No. 898

Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing

Working Paper
Maican, Florin and Matilda Orth (2012). “Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing”. IFN Working Paper No. 898. Stockholm: Research Institute of Industrial Economics (IFN).

Florin Maican, Matilda Orth

The entry of large (“big-box”) stores and the accompanying drastic decrease in the overall number of stores represent a striking trend in retail. We use a dynamic model to measure the impact of the entry of large stores on incumbents’ productivity separate from demand while accounting for local markets and the endogeneity of entry. Using data on all retail food stores in Sweden, we find that incumbents’ productivity increases after the entry of large stores and that the magnitude of the increase declines toward the upper part of the productivity distribution. Our findings highlight that large entrants play a crucial role in driving productivity.

Florin Maican

+46 (0)31 786 4866
+46 (0)76 235 3039

Matilda Orth

+46 (0)8 665 4531
+46 (0)736 42 38 24