The Effect of Relaxation of Entry Restrictions for Large-Scale Retailers on SME Performance: Evidence from Japanese Retail Census

Abstract

In this paper, we quantified the effect of liberalization of entry restriction for large-scale retailers (LSR) on small and medium enterprises (SME) for the Japanese retailing sector in the late 1990s. We constructed a new regional database and compared SME performance at the regional level between regions with/without LSR entry. To tackle the endogeneity between LSR entry and SME performance, we used the propensity score matching method. Comparison with matched samples suggests that LSR entry does not have any negative effect on SME performance. On the contrary, we found a positive effect on SME sales and employment especially in suburban districts.