Trade Liberalization and Food Retail Structure: The Italian Case

In this paper we assess the impact of the LD 114/1998 on the structure of the Italian food retailing industry. We use difference–in–difference technique, comparing the level of concentration, number of stores, average store size and level of service offered to consumers in regions enacting mandated consistent with the LD 114/1998, versus those that did not. Results show that, once the endogenous nature of policy changes is controlled for, the policy appears more effective than expected, in terms of its impact on concentration, consumers’ access, store size and level of service to consumers. While the decree overall seems to have help the consumer to have more access and more in-store services, our analysis suggests food retailing became more concentrated in response to the implementation of the LD 114/1998. Further, the effect of the liberalization seems to have stronger effects in regions where the level of liberalization implemented is “low”.