About the research
Recent years have seen productivity growth revving up in the US while stagnating in the UK.
Much attention has focused on the retailing and wholesaling sector, which appears to account for a large share of both the US speedup and the UK slowdown. To what extent is planning regulation in the UK responsible?
This study documented a shift to smaller shops, particularly within supermarket chains, following a regulatory change in 1996 which increased the costs of opening large stores. This might have caused a slowdown in productivity growth if firms (a) lose scale advantages by moving to smaller stores and (b) lose scope advantages if existing organisational knowledge appropriate to larger stores is not perfectly substitutable with the organisational capital required to run smaller stores.