Wednesday, September 16, 2009

Mom-and-Pop Meet Big-Box: Complements or Substitutes?

Posted by D. Daniel Sokol

John C. Haltiwanger (U Maryland Econ), Ron S. Jarmin (Census Bureau), C. J. Krizan (Census Bureau) explain Mom-and-Pop Meet Big-Box: Complements or Substitutes?

ABSTRACT: In part due to the popular perception that Big-Boxes displace smaller, often family owned (a.k.a. Mom-and-Pop) retail establishments, several empirical studies have examined the evidence on how Big-Boxes' impact local retail employment but no clear consensus has emerged. To help shed light on this debate, we exploit establishment-level data with detailed location information from a single metropolitan area to quantify the impact of Big-Box store entry and growth on nearby single unit and local chain stores. We incorporate a rich set of controls for local retail market conditions as well as whether or not the Big-Boxes are in the same sector as the smaller stores. We find a substantial negative impact of Big-Box entry and growth on the employment growth at both single unit and especially smaller chain stores - but only when the Big-Box activity is both in the immediate area and in the same detailed industry.

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