This paper evaluates the effects of retail shocks on city’s commercial structure. In particular, to identify the retail shock, 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 in order to examine the effects of these large out-of-town stores on the city centre’s commercial activity. The results show that, four years after the big-box opening, between 20 and 30% of the grocery stores in the municipality have disappeared. However, the empty commercial premises are taken by some other new small retail stores. Thus, these results show that a retail shock in the suburbs does not necessarily empty the city centre but it changes the composition of its commercial activity. In addition, when examining the heterogeneity of the effects, the results are different depending on the type of big-box opened, being the conventional stores (as opposed to the discount ones) the ones driving the main results.
View the abstract here.