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CEP discussion paper
Retail shocks and city structure
Maria Sánchez-Vidal
July 2019
Paper No' CEPDP1636:
Full Paper (pdf)

JEL Classification: D2; J22; L81; R1

Tags: retail shocks; city structure; small stores; commercial activity

This paper evaluates the consequences of opening out-of-town big-boxes on the commercial structure of cities. I use a discontinuity in a commercial regulation in Spain that restricts the entry of big-box stores in municipalities of less than 10,000 inhabitants for the period 2003 to 2011. I then use this discontinuity as an instrument for the big-box opening. The results show that three years after the big-box opening, around 15% of the grocery stores in the municipality have disappeared. However, some of the empty commercial premises are taken by other new small retailers in other sectors. As a result, the total number of retail stores in the municipality remains unchanged. These results show that a retail shock in the suburbs does not necessarily empty the city center but can also change only the composition of its commercial activity.