Shops and the City: Evidence on Local Externalities and Local Government Policy from Big Box Bankruptcies

Daniel Shoag and Stan Veuger
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Daniel Shoag: Harvard University

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: Large retailers have significant positive spillovers on nearby businesses, and both private and public mechanisms exist to attract them. We estimate these externalities using detailed geographic establishment data and exogenous variation from national chain bankruptcies. We show that local government policy responds to the size of these spillovers. When political boundaries allow local governments to capture more of the gains from these large stores, governments are more likely to provide retail subsidies. However, these public incentives also crowd out private mechanisms that subsidize these stores and internalize their benefits. On net, we find no evidence that government subsidies affect the efficiency of these large retailers' location choice as measured by the size of the externalities at a given distance, rather than within a certain border.

Date: 2014-04
New Economics Papers: this item is included in nep-reg and nep-ure
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Citations: View citations in EconPapers (8)

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Journal Article: Shops and the City: Evidence on Local Externalities and Local Government Policy from Big-Box Bankruptcies (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp14-019

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