RETAIL RESTRICTIVENESS ANALYSIS IN EASTERN EUROPE RETAIL RESTRICTIVENESS ANALYSIS IN EASTERN EUROPE | Page 4

Belarus is characterised by the strictest operation and anti-competitive regulation, while above average
limitations for outlet establishment, such as number of permits or the length of the procedure and
transparency of procedure, is also contributing to the picture. When it comes to Italy, weak position in the
ranking stems mainly from high bureaucracy during establishment process, primarily the size thresholds,
the requirements for economic data and the legislation specific to location. On the contrary, Latvia,
Lithuania and Estonia have distinguished themselves by offering better conditions for retailers. Particularly,
Latvia has ranked the best, which is largely attributed to Latvia’s procedure of a retail outlet establishment,
which is one of the simplest and time-efficient procedures across studied countries.
IMPLICATIONS
A few studies 2 have revealed the correlation between retail establishment restrictions and price level. The
correlation could indicate that a higher level of prices in retail can be partly explained by an excessive level
of its regulations.
The implications of the restrictiveness are especially high for vulnerable countries such as Ukraine,
Moldova and Belarus, where the share of the income spent on food and beverages reaches high levels (the
maximum of 50% is observed in Ukraine). Under such conditions, even a few per cent’s price increase could
lead to devastating consequences for the socially disadvantaged groups of individuals.
Countries with high RRI have more risks when imposing additional regulations on retail industry. In view of
that, Belarus and Russia should carefully monitor the risks of price increase in the event of further
regulation tightening.
2
For instance, study conducted by the European Commission “A European retail sector fit for the 21st century”, M. Bertrand, F. Kramarz (2004) Does entry regulation hinder job creation? Evidence
from the French retail industry.
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