Deregulating Retail: The Hidden Impact of a Lower Bar to Entry

A key task for economists and policymakers is to predict how markets will respond to regulatory changes. In recent research we analyze the impact of entry regulations on consumers and firms, focusing on product variety. Analyzing rich product-level data, we find that a more liberal entry regime in Swedish retail increases both product variety and efficiency, to the benefit of consumers and firms. Our results suggest that policymakers need to factor in the consequences for product variety when taking regulatory decisions.