Supermarkets and Planning Regulation

Rachel Griffith () and Heike Harmgart ()

No 6713, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We are interested in evaluating the impact of restrictive planning regulation on entry into the UK grocery retail industry. We estimate a model similar to Bresnahan and Reiss (1991) where we allow for multiple store formats. We find that more restrictive planning regulation reduces the number of large format supermarkets in equilibrium. However, the impact is overstated if variation in demographic characteristics across markets is not also controlled for. Our estimates suggest that restrictive planning regulation leads to a loss to consumers of up to £10m per annum. This cost must be offset against any benefits that arise, e.g. due to reduced congestion.

Keywords: entry; land use regulation; retail (search for similar items in EconPapers)
JEL-codes: L11 L52 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic, nep-reg and nep-ure
Date: 2008-02
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