The Decline of Small Cities: Increased Competition from External Shopping Malls or Long-Term Negative Trends?

Sven-Olov Daunfeldt, Oana Mihaescu () and Niklas Rudholm

International Regional Science Review, 2022, vol. 45, issue 2, 225-257

Abstract: We use the entry of 17 external shopping malls in Sweden to investigate how they have affected the performance of incumbent firms located in the city centres of small cities. Estimating a traditional fixed effects regression model while controlling for firm-specific heterogeneity, we find that entry by external shopping malls decreased the labour productivity of incumbent firms in city centres by 5.31%. Revenues decrease by 6.62%, while the reduction in the number of employees (0.45%) is small and not significantly different from zero. However, using time-specific fixed effects to control for common time trends in retailing in small cities, we find that the impact on labour productivity, revenues and the number of employees due to the entry of external shopping malls becomes insignificant. Thus, incumbent firms in small cities have a negative development path mainly due to long-term economic trends, possibly because of the combination of urbanization effects and a lack of local investments.

Keywords: external shopping malls; city centre; firm performance; labour productivity; agglomeration economies; competition; difference-in-differences (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/01600176211034133 (text/html)

Related works:
Working Paper: The Decline of Small Cities: Increased Competition from External Shopping Malls or Long-Term Negative Trends? (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:inrsre:v:45:y:2022:i:2:p:225-257

DOI: 10.1177/01600176211034133

Access Statistics for this article

More articles in International Regional Science Review
Bibliographic data for series maintained by SAGE Publications ().