du.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Comparison and one-stop shopping after big-box retail entry: a spatial difference-in-difference analysis
Dalarna University, School of Technology and Business Studies, Microdata Analysis.
HUI Research, Sweden.ORCID iD: 0000-0003-3362-5755
Dalarna University, School of Technology and Business Studies, Microdata Analysis.
Dalarna University, School of Technology and Business Studies, Economics. HUI Research, Sweden.
2018 (English)In: Journal of Retailing and Consumer Services, ISSN 0969-6989, E-ISSN 1873-1384, Vol. 40, p. 175-187Article in journal (Refereed) Published
Abstract [en]

This paper empirically measures the potential spillover effects of big-box retail entry on the productivity of incumbent retailers in the entry regions, and investigates whether the effects differ depending on 1) if the entry is in a rural or urban area, and 2) if the incumbent retailers are within retail industries selling substitute or complement goods to those found in IKEA. To identify the IKEA-entry effect, a difference-in-difference model is suitable, but traditionally such estimators neglect the possibility that firms’ sales are determined by a process with spatially interactive responses. If ignored, these responses may cause biased estimates of the IKEA entry effect due to spatial heterogeneity of the treatment effect. One objective of this paper is thus to propose a spatial difference-in-difference estimator accounting for possible spatial spillover effects of IKEA entry. Particular emphasis is placed on the development of a suitable weight matrix accounting for the spatial links between firms, where we allow for local spatial interactions such that the outcome of observed units depends both on their own treatment as well as on the treatment of their neighbors. Our results show that for complementary goods retailers (or one-stop shopping retailers) in Haparanda and Kalmar, productivity increased by 35% and 18%, respectively, due to IKEA entry. No statistically significant effects were found for the entries in Karlstad and Gothenburg, indicating that it is mainly incumbents in smaller entry regions that benefit from IKEA entry. Also, for incumbent retailers selling substitute (or comparison shopping) goods no significant effects were found in any of the entry regions, indicating that it is mainly retailers selling complementary goods that benefit from IKEA entry. Finally, our results also show that ignoring the possibility of spatially correlated treatment effects in the regression models reduces the estimated impact of the IKEA entries in Haparanda and Kalmar on productivity in one-stop shopping retail firms with 3% and 0.1% points, respectively. © 2017 Elsevier Ltd

Place, publisher, year, edition, pages
2018. Vol. 40, p. 175-187
Keywords [en]
Big-box entry, Production functions, Retail entry subsidies, Retail productivity, Spatial difference-in-difference
National Category
Economics and Business
Research subject
Complex Systems – Microdata Analysis
Identifiers
URN: urn:nbn:se:du-26630DOI: 10.1016/j.jretconser.2017.10.003Scopus ID: 2-s2.0-85033554892OAI: oai:DiVA.org:du-26630DiVA, id: diva2:1161150
Available from: 2017-11-29 Created: 2017-11-29 Last updated: 2018-08-21Bibliographically approved
In thesis
1. Who benefits when IKEA enters local markets in Sweden?: An empirical assessment using difference-in-difference analysis, synthetic control methods, and Twitter sentiment analysis
Open this publication in new window or tab >>Who benefits when IKEA enters local markets in Sweden?: An empirical assessment using difference-in-difference analysis, synthetic control methods, and Twitter sentiment analysis
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Policy makers often spend considerable amounts of money to attract IKEA to their region despite not having any empirical measurements on its expected contribution to the local economy. As such, an empirical study of the economic and social impact of new IKEA stores can aid political decision making, and contribute to the literature regarding how big-box retail entry affects the regions where they enter.

This dissertation aims to estimate: the impact of IKEA entry on incumbent retailers productivity, and investigate if the impact is heterogenus depending on local maket size, type of retail industry, distance to surrounding retailers, and firm size; IKEA entry effects on the average labor productivity in durable goods retailing in the entry regions; and, finally, public opinions regarding  IKEA entry.

For IKEA entry effects on incumbent retailers, Paper I~III separately examine four factors of potential heterogeneity. Paper I finds that market size matters: smaller rural regions have bigger IKEA effects. Paper II considers two factors: firm industry and distance, and confirms that IKEA entry effects dissipate over distance. The positive impact of IKEA entry on incumbent retailers is limited to those selling complementary goods to IKEA. No positive effects were found for the urban entry in Gothenburg in the two first papers, which is somewhat surprising. Paper III found that a positive effect exist also in Gothenburg, but it is limited to relatively small incumbent retailers with a capital stock below 1 500 000 SEK. Policy making tends to consider IKEA overall effects on entry municipalities besides IKEA spillover effects on firms. Paper V shows that rural regions are affected by IKEA entry, while larger urban markets are not.

For the social effects of IKEA, Paper VI uses Twitter text mining to study public opinions regarding IKEA entry into local markets. The new IKEA stores under study caught significant public attention at the time of entry, with mostly positive attitudes toward the new stores. The favorite topics for discussion at the time of the different IKEA entries were heterogeneous depending on location.

Methodologically, Paper I uses traditional Difference-in-Difference (DID) to have an initial understanding of IKEA entry spillover effects in four regions; Paper II extends to Spatial DID to catch the spatial interaction between firms; Paper III uses Panel Smooth Transition Regression to identify heterogenous effects due to firms size. Paper IV investigates a new treatment effects estimation aproach, Synthetic Control Method (SCM), to explore when the SCM is powerful, and how to improve its performance; Paper V then uses SCM to estimate IKEA effects at municipality level. In addition, to make SCM developed readily available for other researchers, the author of this thesis also published one web-application to implement a synthetic control method power test, and another to implement parametric & non-parametric estimation and inference.  

These findings confirm that IKEA has a positive effect on the regions where they enter. Nevertheless, governments that are to decide if to allow a big-box retail entry into their local community should be aware that the impact of such entry will depend on the size of the existing retail market, the type of existing retail industry, and the size of existing retailers in the entry region.

Place, publisher, year, edition, pages
Borlänge: Högskolan Dalarna, 2018
Series
Dalarna Doctoral Dissertations ; 7
Keywords
big-box entry effect; spatial spill-over effect; heterogeneous causal effect; difference-in-difference; synthetic control method; sentiment analysis.
National Category
Economics and Business
Research subject
Complex Systems – Microdata Analysis
Identifiers
urn:nbn:se:du-27896 (URN)978-91-85941-85-8 (ISBN)
Public defence
2018-09-14, Clas Ohlson, Borlänge, 13:00 (English)
Opponent
Supervisors
Funder
Swedish Retail and Wholesale Development Council, 2015:4
Available from: 2018-08-21 Created: 2018-06-14 Last updated: 2018-08-21Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full textScopus

Authority records BETA

Han, MengjieMihaescu, OanaLi, YujiaoRudholm, Niklas

Search in DiVA

By author/editor
Han, MengjieMihaescu, OanaLi, YujiaoRudholm, Niklas
By organisation
Microdata AnalysisEconomics
In the same journal
Journal of Retailing and Consumer Services
Economics and Business

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 63 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf