Retail Globalization and Household Welfare: Evidence from Mexico

Policy Summary

Atkin at el examines the effect of the arrival of global retail chains in Mexico on Mexican household’s welfare and on traditional retail stores. Foreign retailers charge lower prices and offer bigger selections than traditional retail stores, which lowers the cost of living for residents. However, the entry of foreign retail stores is associated with a decline in traditional retail’s profit margin and people employed. No significant effect was found on overall household income or level of employment. This paper has implications on the benefits and costs of allowing foreign retail stores entry into marketing in developing countries.  

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