Entry Regulations and Product Variety in Retail

This paper estimates a dynamic model of store adjustments in product variety that considers multiproduct service technology to evaluate the impact of entry regulations on variety and long-run profits in Swedish retail. Using rich data on stores and product categories, we find that more liberal entry regulation increases productivity and decreases the adjustment costs of variety. Counterfactual simulations of modest liberalizations of entry incentivize incumbents to offer more product categories to consumers while increasing efficiency and long-run profits. Regional differences are reduced as consumers and incumbents obtain more benefits in markets with restrictive regulation. Generous liberalizations of entry induce net exit of product categories and harm incumbents in markets with limited demand.L11; L13; L8

Who visits the museums? A comparison between stated preferences and observed effects of entrance fees

This study investigates whether the introduction of an entrance fee affects visitor composition at a state funded museum in Sweden. While entrance to the museum was still free, we conducted a survey to collect information about visitor characteristics and used the Contingent Valuation (CV) method to measure visitors’ willingness to pay (WTP) for a visit. The results of the CV survey show that even a very low entrance fee level results in a significant reduction in several target groups that the museum has policy directives to reach. Additionally, we conducted another survey after the introduction of the fee. Thus, we have a unique opportunity to test the validity of CV in the context of a cultural good. The comparison between the predicted results from the CV and the observed change in visitor composition after the introduction of the fee implies that CV does predict a majority of the changes successfully

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

Entry of large (“big-box”) stores along with a drastic fall in the total number of stores is a striking trend in retail markets. We use a dynamic structural model to estimate total factor productivity in retail. Then we assess whether entry of large stores drives exit and growth in the productivity distribution of incumbents. Using detailed data on all retail food stores in Sweden, we find that local market characteristics, selection, and nonlinearities in the productivity process are important when estimating retail productivity. Large entrants force low productive stores to exit and surviving stores to increase their productivity growth. Growth increases most among incumbents in the bottom part of the productivity distribution, and then declines with the productivity level of incumbents. We use political preferences in local markets to control for endogeneity of large entrants. Our findings suggest that large entrants play a crucial role for driving productivity growth

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

Entry of large (“big-box”) stores along with a drastic fall in the total number of stores is a striking trend in retail markets. In this paper we provide a dynamic structural model, controlling for unobserved prices and local market characteristics, to estimate total factor productivity in retail markets. Then we evaluate how increased competition from large entrants influences incumbents’ productivity in local markets. Using detailed data on retail food stores in Sweden, we find that net entry substantially contributes to industry productivity growth. In local markets, productivity dispersion increases as a consequence of large entrants, i.e., low productive incumbents become less productive whereas high productive incumbents become more productive. We conclude that large entrants play a central role in explaining productivity differences across stores.Retail markets; Imperfect competition; Industry dynamics; TFP; Space productivity; Dynamic structural model

Who visits the museums? A comparison between stated preferences and observed effects of entrance fees

This study investigates whether the introduction of an entrance fee affects visitor composition at a state funded museum in Sweden. While entrance to the museum was still free, we conducted a survey to collect information about visitor characteristics and used the Contingent Valuation (CV) method to measure visitors’ willingness to pay (WTP) for a visit. The results of the CV survey show that even a very low entrance fee level results in a significant reduction in several target groups that the museum has policy directives to reach. Additionally, we conducted another survey after the introduction of the fee. Thus, we have a unique opportunity to test the validity of CV in the context of a cultural good. The comparison between the predicted results from the CV and the observed change in visitor composition after the introduction of the fee implies that CV does predict a majority of the changes successfully.free entrance; visitor composition; museum; natural experiment; stated preferences

The Dynamic Impact of Exporting on Firm R&D Investment

This article estimates a dynamic structural model of rm R&D investment in twelve Swedish manufacturing industries and uses it to measure rates of return to R&D and to simulate the impact of trade restrictions on the investment incentives. R&D spending is found to have a larger impact on rm productivity in the export market than in the domestic market. Export market pro ts are a substantial source of the expected return to R&D. Counterfactual simulations show that trade restrictions lower both the expected return to R&D and R&D investment level, thus reducing an important source of the dynamic gains from trade. A 20 percent tari on Swedish exports reduces the expected bene ts of R&D by an average of 32.2 percent and lowers the amount of R&D spending by 13.9 percent in the high-tech industries. The corresponding reductions in the low-tech industries are 30.4 and 8.9 percent, respectively. R&D adjustments in response to export tari s mainly occur on the intensive, rather than the extensive, margin.JEL Classi cation: L6, O3, L13, F1

Entry into Local Retail Food Markets in Sweden: A Real-Options Approach

A real-options approach was used, incorporating uncertainty and irreversibility of investments, to study the number of stores entering the Swedish retail food market during the period 1994-2002. It was found that uncertainty affected the entry-decision. Entry was less frequent in highly concentrated local retail food-markets characterized by a high degree of uncertainty, whereas higher profit opportunities seem to have increased the probability of entry

Entry into Local Retail Food Markets in Sweden: A Real-Options Approach

A real-options approach was used, incorporating uncertainty and irreversibility of investments, to study the number of stores entering the Swedish retail food market during the period 1994-2002. It was found that uncertainty affected the entry-decision. Entry was less frequent in highly concentrated local retail food-markets characterized by a high degree of uncertainty, whereas higher profit opportunities seem to have increased the probability of entry.Real options; uncertainty; retail food; entry; negative binomial regression