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

Sven-Olov Daunfeldt (), Oana Mihaescu () and Niklas Rudholm
Additional contact information
Oana Mihaescu: Institute of Retail Economics (Handelns Forskningsinstitut), Postal: Handelns Forskningsinstitut, Regeringsgatan 60, 103 29 Stockholm, Sweden
Niklas Rudholm: Institute of Retail Economics (Handelns Forskningsinstitut), Postal: Handelns Forskningsinstitut, Regeringsgatan 60, 103 29 Stockholm, Sweden

No 10, HFI Working Papers from Institute of Retail Economics (Handelns Forskningsinstitut)

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. We find that entry by external shopping malls decreased labour productivity for incumbent firms in city centres by -5.31%. However, when using time-specific fixed effects to control for common time trends in retailing in small cities, the impact on labour productivity, revenues, and number of employees due to the entry of external shopping malls becomes insignificant. The negative impact on incumbent firms is thus not due to the entry of external shopping malls but rather due to long-term negative economic trends in these cities.

Keywords: external shopping malls; city centre; firm performance; agglomeration economies; competition; difference-in-differences (search for similar items in EconPapers)
JEL-codes: D22 L25 P25 R12 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2020-08-24
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ent, nep-eur, nep-geo, nep-sbm and nep-ure
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