Abstract
AbstractWe 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 store experienced revenue loss due to IKEA entry. In contrast to retail revenues, the effects on employment were statistically insignificant.
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