Local retail prices, product variety, and neighborhood change
Fernando Borraz, Felipe Carozzi, Nicolas Gonzalez-Pampillon and Leandro Zipitria
We study how local grocery markets within a city are affected by changes in housing markets. Our empirical strategy exploits a shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. The introduction of new housing stock induced by the policy causes a reduction in grocery prices of 2.3 percent and an increase in locally available product varieties. Using insights from a multiproduct model of imperfect competition and estimates for different types of stores, we show these changes are the result of incumbents' response to an increase in local demand.
1 February 2024
American Economic Journal: Economic Policy 16(1) , pp.1-33, 2024
https://www.aeaweb.org/articles?id=10.1257/pol.20210817
This Journal article is published under the centre's Urban programme, Neighbourhoods programme.
This publication comes under the following theme: Housing