Productivity Dynamics and the Role of ‘Big‐Box’ Entrants in Retailing

Florin Maican, University of Gothenburg, Department of Economics; Research Institute of Industrial Economics (IFN) and Matilda Orth, Research Institute of Industrial Economics (IFN), Stockholm examine Productivity Dynamics and the Role of ‘Big‐Box’ Entrants in Retailing.

ABSTRACT: 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 drive productivity.