Clustering or scattering: the underlying reason for regulating distance among retail outlets
Joan-Ramon Borrell () and
Laura Fernández-Villadangos ()
Additional contact information Laura Fernández-Villadangos: Research Group on Governments and Markets (GiM) - Dep. de Política Econòmica - Institut d’Economia Aplicada (IREA), Universitat de Barcelona, Diagonal 690, 08034 Barcelona, Spain.
Concerns on the clustering of retail industries and professional services in main streets had traditionally been the public interest rationale for supporting distance regulations. Although many geographic restrictions have been suppressed, deregulation has hinged mostly upon the theory results on the natural tendency of outlets to differentiate spatially. Empirical evidence has so far offered mixed results. Using the case of deregulation of pharmacy establishment in a region of Spain, we empirically show how pharmacy locations scatter, and that there is not rationale for distance regulation apart from the underlying private interest of very few incumbents.