Barriers to retail competition and prices: evidence from Spain

Alexander Hoffmaister

Oxford Economic Papers, 2010, vol. 62, issue 2, 395-416

Abstract: Why do prices in Spain's regions fail to converge? The prime suspects for this puzzling result are differences in regional barriers to entry in retail distribution. This paper develops a Cournot-Nash model of imperfect competition to illustrate the effect of barriers on prices. A unique data set--derived from an extensive analysis of competition policies in Spain--provides evidence that barriers to entry increase regional prices. The evidence also suggests that, consistent with the model's predictions, barriers to entry raise prices up to a point, and thus indicate that barriers have a threshold effect on prices. Copyright 2010 Oxford University Press 2009 All rights reserved, Oxford University Press.

Date: 2010
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Working Paper: Barriers to Retail Competition and Prices: Evidence From Spain (2006)
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