Who benefits when IKEA enters a local market?

Policymakers spend considerable amounts of money to attract IKEA to their local region. But what effects does IKEA have on a market? Yujiao Li answers this question in her thesis.

Portrait Yujiao LiAlthough policymakers often spend money to attract IKEA to their region, there is no empirical studies as to the expected effects that its establishment will have on a local economy – at least, not until recently.

The results from Yujiao Li's thesis demonstrate that IKEA has positive economic and social effects on the regions they enter. These effects are heterogeneous depending on the size of the local market, the type of existing retail industry, the distance to surrounding retailers, and the size of business.

"My results demonstrate that the effects of the establishment of an IKEA are more positive in smaller, more rural regions than in larger urban regions. The results also demonstrate that the positive impact of IKEA entry on incumbent retailers is limited to those selling complementary goods to IKEA," states Yujiao Li.

The further aim of the thesis was to gauge public opinion in terms of the establishment of an IKEA. The results show that the public have a positive view of IKEA entering their local market.

"My thesis contributes with knowledge about the effects on the community when IKEA enters a local market. This knowledge can be a help to policymakers," says Yujiao Li.

On September 14, Yujiao Li successfully defended her thesis entitled "Who benefits when IKEA enters local markets in Sweden?: An empirical assessment using difference-in-difference analysis, synthetic control methods, and Twitter sentiment analysis".

Link to thesis

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