2019
DOI: 10.1111/pirs.12459
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Spillover effects when IKEA enters: Do incumbent retailers win or lose?

Abstract: We investigate the effects of IKEA entry in three Swedish municipalities, finding that revenues for incumbent retailers located 1 km from the new IKEA store experienced a 7% increase due to positive spillover. The effect was insignificant for retailers located in city centres or more than 1 km from IKEA. Moreover, the positive agglomeration effects only dominate the negative competition effects for stores that sell complementary products, while same-market retailers located between 2 and 5 km from the new IKEA… Show more

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Cited by 15 publications
(23 citation statements)
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“…Previous studies of the effects of big-box retail entry on surrounding businesses have mainly considered the impact on retail revenues or retail employment and have been based mainly on the entry of Wal-Mart stores in the USA, 1 although there are some exceptions. For example, Jones and Doucet (2000) and Hernandez (2003) studied the Canadian market and big-box entry in general, while Daunfeldt et al (2016;2017) investigated the impact of IKEA entry on revenues and employment in Swedish municipalities.…”
Section: Introductionmentioning
confidence: 99%
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“…Previous studies of the effects of big-box retail entry on surrounding businesses have mainly considered the impact on retail revenues or retail employment and have been based mainly on the entry of Wal-Mart stores in the USA, 1 although there are some exceptions. For example, Jones and Doucet (2000) and Hernandez (2003) studied the Canadian market and big-box entry in general, while Daunfeldt et al (2016;2017) investigated the impact of IKEA entry on revenues and employment in Swedish municipalities.…”
Section: Introductionmentioning
confidence: 99%
“…The results of these studies are ambiguous, with some finding positive (Davidson and Rummel 2000;Artz and Stone 2012;Daunfeldt et al 2016;2017) and others negative (e.g., Merriman et al 2012) impacts of big-box entry on retail revenues. The findings regarding the impact on employment are also inconclusive.…”
Section: Introductionmentioning
confidence: 99%
“…Previous studies of big-box retail entry mostly use difference-in-difference (DiD) estimations, often after having first selected control regions with characteristics similar to the entry regions (e.g., Basker 2007;Daunfeldt et al 2015Daunfeldt et al , 2017Håkansson et al 2018;Han et al 2018). However, a potential weakness of DiD analysis is that it estimates the average IKEA entry effect on all firms, ignoring the possibility of subgroup heterogeneity in the effects.…”
Section: Methodsmentioning
confidence: 99%
“…PSTR assumes that regression coefficients may vary across subgroups, and we use PSTR to find subgroups where the coefficient of either capital or labour on output is more pronounced. 2 Since incumbent retailers increase their use of labour (Daunfeldt et al 2015(Daunfeldt et al , 2017 and capital (Rudholm et al 2015) when IKEA enters the market, this analysis will also indicate whether IKEA entry is likely to have a larger effect on the output of small firms or large firms. The analysis is done on pre-IKEA entry data, as entry could affect the production function.…”
Section: Methodsmentioning
confidence: 99%
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