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Shops and the city

Author

Listed:
  • Stan Veuger

    (American Enterprise Institute)

  • Daniel Shoag

Abstract

We report three findings: (1) Using evidence from chain bankruptcies and data on 12-18 million establishments per year, we show that large retailers produce significant positive spillovers. (2) Local governments respond to the size of these externalities. When a town's boundaries allow it to capture a larger share of retail spillovers, it is more likely to offer retail subsidies. (3) These subsidies crowd out private-sector mechanisms that also subsidize large retailers, such as shopping malls. These facts provide powerful evidence of the Coase theorem at work and highlight a concern for local development policies even when externalities can be targeted.

Suggested Citation

  • Stan Veuger & Daniel Shoag, 2014. "Shops and the city," AEI Economics Working Papers 416683, American Enterprise Institute.
    • Handle: RePEc:aei:rpaper:416683
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    File URL: http://www.aei.org/publication/shops-and-the-city-working-paper
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    Cited by:

    1. Bernstein, Shai & Colonnelli, Emanuele & Giroud, Xavier & Iverson, Benjamin, 2019. "Bankruptcy spillovers," Journal of Financial Economics, Elsevier, vol. 133(3), pages 608-633.
    2. Chenggang Wang, 2022. "Green Technology Innovation, Energy Consumption Structure and Sustainable Improvement of Enterprise Performance," Sustainability, MDPI, vol. 14(16), pages 1-21, August.

    More about this item

    Keywords

    subsidies; retail;

    JEL classification:

    • A - General Economics and Teaching

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