Local Retail Prices, Product Variety, and Neighborhood Change
American Economic Journal: Economic Policy
vol. 16,
no. 1, February 2024
(pp. 1-33)
Abstract
We study how local grocery markets within a city are affected by changes in housing markets. Our empirical strategy exploits a shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. The introduction of new housing stock induced by the policy causes a reduction in grocery prices of 2.3 percent and an increase in locally available product varieties. Using insights from a multiproduct model of imperfect competition and estimates for different types of stores, we show these changes are the result of incumbents' response to an increase in local demand.Citation
Borraz, Fernando, Felipe Carozzi, Nicolás González- Pampillón, and Leandro Zipitría. 2024. "Local Retail Prices, Product Variety, and Neighborhood Change." American Economic Journal: Economic Policy, 16 (1): 1-33. DOI: 10.1257/pol.20210817Additional Materials
JEL Classification
- L81 Retail and Wholesale Trade; e-Commerce
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R22 Urban, Rural, Regional, Real Estate, and Transportation Economics: Other Demand
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R31 Housing Supply and Markets
- R38 Production Analysis and Firm Location: Government Policy
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