Local Retail Prices, Product Varieties and Neighborhood Change

Fernando Borraz, Felipe Carozzi (f.carozzi@lse.ac.uk), Nicolás González-Pampillón (n.gonzalez-pampillon@lse.ac.uk) and Leandro Zipitria
Additional contact information
Felipe Carozzi: Department of Geography and the Environment. London School of Economics

No 2021013, Documentos de trabajo from Banco Central del Uruguay

Abstract: We study how retail prices within a city are affected by changes in local housing markets. Our empirical strategy is based on an exogenous shift in the spatial distribution of the construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. We provide differences-in-differences and instrumental variable estimates showing that the price of retail goods decreases in areas within the city that experience more residential development. We use a multi-product model of imperfect competition to relate this change to an expansion in either product varieties or firm entry. We report evidence in support of the varieties channel, with new development causing an increase in the number of varieties available locally. Our results have implications for urban planning policy and the broader discussion about winners and losers from neighborhood change.

Keywords: Retail Prices; Housing Stock; Neighborhood Change (search for similar items in EconPapers)
JEL-codes: R23 R32 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2021
New Economics Papers: this item is included in nep-lam and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.bcu.gub.uy/Estadisticas-e-Indicadores/ ... 0Trabajo/13.3021.pdf First version, 2021 (application/pdf)

Related works:
Working Paper: Local retail prices, product varieties and neighborhood change (2022)
Working Paper: Local retail prices, product varieties and neighborhood change (2022)
Working Paper: Local Retail Prices, Product Varieties and Neighborhood Change (2021)
Working Paper: Local Retail Prices, Product Varieties and Neighborhood Change (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bku:doctra:2021013

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