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There is evidence that retail trade regulations may have a signifi cant impact on prices, employment and productivity. In the case of Spain, the retail trade sector is subject to a wide ranging set of regional regulations. This paper provides a database and a set of indicators on the main restrictions to retail trade in place in Spain's Autonomous Regions (Comunidades Autónomas) between 1997 and 2007. The restrictions bear on the following regulatory aspects: shop opening hours, seasonal sales, defi nitions of large retail outlets, regional licensing of hard discount stores, moratoria in retail trade licence issuance and specifi c taxes on large retail outlets. The paper next presents an aggregate indicator constructed on the basis of these restrictions using factor analysis. Lastly, using data panel techniques, this paper provides estimates of the effect of trade restrictiveness (using the aggregate indicator) on commercial density, the employment in the sector and the rate of infl ation in each region.The results of this research point to an increase in the level of regulation over the course of the period. Further, there is evidence that greater regulation may be associated with higher infl ation, lower employment in the sector and greater commercial density. In any event, these results should be viewed with caution given the necessary limitations of the regulation indicator used and the limited data period available.

1.1 The importance, structure and performance of the distributive trades sector 15 1.1.1 Defi nitional issues 15 1.1.2 A closer look at the grocery trade 17 1.1.3 Labour market and productivity 34 1.1.4 Cost structure -the role of product and channel 39 1.2 Regulation in the distributive trades sector 40 1.3 Competition in the distributive trades 43 1.3.1 Conceptual overview 44 1.3.2 Empirical measures of competition using national data 47 1.3.3 Empirical measures of competition using store-level data 50 2 THE IMPACT OF STRUCTURAL FEATURES ON PRICE LEVELS, PRICE-SETTING BEHAVIOUR, REGIONAL PRICE DYNAMICS AND PASS-THROUGH 60 2.1 The impact of structural features on price level differences 60 2.1.1 Introduction and motivation 60 2.1.2 The degree of price dispersion and convergence 61 2.1.3 Is there a "border effect" on prices? 65 2.1.4 The impact of the structural features of the distributive trades sector 68 2.2 Competition, outlet type and the frequency of price changes 71 ECB Occasional Paper No 128

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