Abstract
The present study investigates the impacts of the entry of large-scale retail establishments on the sales and exits of existing local grocery or clothing retail stores in Japan. Similar to related cases in Europe and the US, in Japan as well, the findings of the existing studies are mixed. We examine this topic using micro data from the Japanese Census of Commerce from 1997 to 2014. The difference-in-differences method is used by controlling for the retail establishments' self-selection bias in terms of location selection by the use of the demand potential function, used in new economic geography literature. The empirical results indicate that the impacts vary based on the periods (short term versus long term), distance from entry locations (distance bands), size of entrants (in terms of floor size), and type of existing stores (grocery or clothing). For clothing stores, the impacts are basically negative on their survival and positive on the sales of surviving stores, especially in the long term. The impacts are stronger when the distance from entry locations is less than 1000 metres. For grocery stores, the tendencies of the impacts are similar to those for clothing stores, but the impacts are estimated to be much weaker. Further, this study provides possible policy implications based on the results.s
