Liberalizing entry regulations boosts product variety and profits in retail.
The study looked at how rules for opening new stores affect the variety of products they offer. By analyzing data from Swedish retail, the researchers found that looser rules lead to more diverse products and higher profits in the long run. When regulations are relaxed, existing stores offer more choices to customers and become more efficient. In regions with strict rules, both customers and stores benefit less. But if rules are too relaxed, some stores may close down.