Does the eviction of street vendors affect food prices? Evidence from China's chengguan system

The aim of this paper is to investigate the impact of the eviction of street vendors on household food prices. Existing studies suggest the removal of street vendors have impacts on consumer welfare, but few of them have quantified the impact empirically. Employing a unique dataset of city-level food prices, we find that the establishment of chengguan (formally, the Urban Administration and Law Enforcement Bureau) has a positive and significant impact on the average prices of fruits and vegetables. Evicted by chengguan, the absence of street vendors leads to increase in prices of fruits and vegetables by approximately 4.7% all else being equal. Further investigation suggests that cities with less developed retail markets and more stringent administrative enforcement experience a larger price increase led by the establishment of chengguan. Our results provide insights on the role of street vendors in supplying inexpensive goods. Interventions that foster market competition can help mitigate the price effect led by the absence of street vendors.