Developments in Retail Trade Regulation in Spain and Their Macroeconomic Implications

Abstract

The literature points out that retail trade regulations may have a significant impact on prices, employment and productivity. In the case of Spain, the retail trade sector is subject to a rich 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. Those restrictions bear on the following regulatory aspects: shopping hours, blue laws, seasonal discounts, definitions of big stores, licensing of discount stores, moratoria in retail trade licence issuing and taxes on big stores. The paper presents then an aggregate indicator constructed on the basis of these restrictions using factor analysis. Finally, this research estimates the effect of the commercial restrictiveness (using the aggregate indicator) among the regions on the commercial density, the number of employees of the sector and the rate of inflation. For that, panel data techniques are applied to the analysis. On the one hand, the results of this research point to an increase in the level of regulation throughout the period. On the other hand the estimates show that an increase in the level of restrictiveness increases commercial density and inflation among the regions but diminishes the number of persons employed in the sector. In either case, the results of this research must be taken with care due to the limitations of the regulation indicator studied and the limited availability of data for the period under study.

Note: Downloadable document is in Spanish.

Keywords: Regulation in services markets, barriers to entry, retailing, blue laws

JEL Classification: K23, L81