Local retail prices, product varieties and neighborhood change

Fernando Borraz, Felipe Carozzi, Nicolas Gonzalez Pampillon and Leandro Zipitria

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study how local grocery prices within a city are affected by changes in housing markets. Our empirical strategy is based on an exogenous shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. We provide instrumental variable estimates showing that the relative price of grocery goods decreases in areas within the city that experience more residential development: the estimated elasticity of grocery prices to newly-built residential space lies between -3 and -4%. Using a multi-product model of imperfect competition, we show that this negative effect can result from either an expansion in product varieties or firm entry. We report evidence supporting the varieties channel, with new residential development causing an increase in varieties of groceries available locally, and evidence of changes in the composition of stores.

Keywords: retail prices; housing stock; neighborhood change (search for similar items in EconPapers)
JEL-codes: R23 R32 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2022-01-20
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:

Downloads: (external link)
http://eprints.lse.ac.uk/117749/ Open access version. (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 (2021)
Working Paper: Local Retail Prices, Product Varieties and Neighborhood Change (2021)
Working Paper: Local Retail Prices, Product Varieties and Neighborhood Change (2021)
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:ehl:lserod:117749

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().