Retail Dynamics Under Financial and Regulatory Constraints
Friday, Jan. 6, 2017 3:15 PM – 5:15 PM
- Chair: John Clapp, University of Connecticut
Dynamic Franchising Decisions
AbstractWe develop an estimable dynamic oligopoly model for retailing, in which forward-looking firms trategically choose expansion plans taking into account of the costs and revenues of franchising and corporate outlets. We estimate this model in the market for convenience-store industry in Japan. First, we demonstrate noticeable differences in expansion strategies across ownership types. Second, we confirm that franchisee-run outlets generate higher revenues, all else held equal, than their corporaterun counterparts. Third, our sunk cost estimates reveal that it is more costly to open and close franchisee-run outlets than corporate-run outlets, while at the same time, franchisee-run outlets enjoy lower fixed operational costs. Finally, our counterfactual analysis using the estimated model presents a salient connection between preemptive motives and corporate-based expansion, which offsets the inferred revenue and cost-based benefits of franchisee-run expansion.
Does Entry Regulation of Big-box Stores Protect the Retail Sector? Evidence from Store Cap Ordinances in the U.S.
AbstractSince the rapid growth of big-box retailers in 1990s, many local governments and municipalities have enacted store cap ordinances (SCOs) to constraint store sizes in order to prevent entry of big-box retailers and to protect local retail business. By exploiting SCOs introduced in different municipalities, at different periods of time and with different levels of restrictiveness, I analyze the effects of entry regulation on the retail sector in the US. I address the endogeneity problem by constructing instrumental variables using political composition and the geographic and time pattern of the passage of SCOs. My findings suggest that, in contrast to the objectives of these regulations, the retail sector was actually harmed by the creation of entry barriers.
Retail Marijuana Establishments and Commercial Real Estate Spillovers
AbstractWe examine the impact of two waves of marijuana establishment openings in Denver Colorado. We find that a typical retail marijuana establishment, either medicinal or recreational, will have significant negative impacts on commercial rents within a half-mile radius. Preliminary results show this effect to be between a 5and 15 percent loss in rent relative to counterfactual locations. We produce these estimates using an array of plausible counter factuals and test for identification through the use of a pseudo treatment of coagglomerated industries. Results support the hypothesis that retail marijuana establishments have a substantial negative spillover effect on neighboring commercial properties.
- R0 - General
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location