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The entry of online retailers and productivity dynamics in the retail trade sector

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  • Chun, Hyunabe
  • Shin, Donghan

Abstract

We examine the labor productivity dynamics of online retailers using census business data combined with mail-order business licenses. Online retailers primarily contribute to retail sector productivity through post-entry productivity growth, whereas brick-and-mortar stores contribute by replacing less productive stores with more productive entrants. The low productivity of online entrants due to low entry costs negatively affects the industry’s productivity. Our findings suggest that the large-scale entry of online retailers could change productivity dynamics in the retail trade sector.

Suggested Citation

  • Chun, Hyunabe & Shin, Donghan, 2023. "The entry of online retailers and productivity dynamics in the retail trade sector," Economics Letters, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004311
    DOI: 10.1016/j.econlet.2022.110957
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    References listed on IDEAS

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    1. Maican, Florin & Orth, Matilda, 2015. "A dynamic analysis of entry regulations and productivity in retail trade," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 67-80.
    2. Janghee Cho & Hyunbae Chun & Yoonsoo Lee, 2022. "Productivity Dynamics in the Retail Trade Sector: The Roles of Large Modern Retailers and Small Entrants," Working Papers 2202, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    3. Lucia Foster & John Haltiwanger & C. J. Krizan, 2006. "Market Selection, Reallocation, and Restructuring in the U.S. Retail Trade Sector in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 748-758, November.
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    More about this item

    Keywords

    E-commerce; Entry and exit; Productivity; Retail trade sector;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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