IDEAS home Printed from https://ideas.repec.org/p/yon/wpaper/2017rwp-115.html
   My bibliography  Save this paper

Radius Restriction and Firms' Survival: Evidence from the Coffee Franchise Industry

Author

Listed:
  • Yun Jeong Choi

    (Yonsei University)

  • Jee Young Kim

    (Yonsei University)

  • Min Hee You

    (Yonsei University)

Abstract

This paper investigates the effects of distance restrictions on the survival of coffee shops in Korea, which were implemented by South Korea¡¯s Fair Trade Commission to limit the opening of new shops by headquarters to protect franchisees¡¯ territorial rights. Using Cox proportional hazard regression analyses, we find that the radius restriction reduced the hazard rates of all coffee shops significantly. However, selective regulation on five big brands affected interbrand competition and changed the landscape of the coffee franchise industry. Different benefits across different coffee brands also widened the gap between small brand coffee shops and the rest.

Suggested Citation

  • Yun Jeong Choi & Jee Young Kim & Min Hee You, 2017. "Radius Restriction and Firms' Survival: Evidence from the Coffee Franchise Industry," Working papers 2017rwp-115, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2017rwp-115
    as

    Download full text from publisher

    File URL: http://121.254.254.220/repec/yon/wpaper/2017rwp-115.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marianne Bertrand & Francis Kramarz, 2002. "Does Entry Regulation Hinder Job Creation? Evidence from the French Retail Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1369-1413.
    2. Viviano, Eliana, 2008. "Entry regulations and labour market outcomes: Evidence from the Italian retail trade sector," Labour Economics, Elsevier, vol. 15(6), pages 1200-1222, December.
    3. Mitsuru Igami, 2011. "Does Big Drive Out Small?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(1), pages 1-21, January.
    4. Emek Basker, 2005. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 174-183, February.
    5. Arturs Kalnins, 2003. "Hamburger Prices and Spatial Econometrics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(4), pages 591-616, December.
    6. Udo Staber, 2001. "Spatial Proximity and Firm Survival in a Declining Industrial District: The Case of Knitwear Firms in Baden-Wu¨rttemberg," Regional Studies, Taylor & Francis Journals, vol. 35(4), pages 329-341.
    7. Oliver Falck, 2007. "Survival chances of new businesses: do regional conditions matter?," Applied Economics, Taylor & Francis Journals, vol. 39(16), pages 2039-2048.
    8. J. Myles Shaver & Fredrick Flyer, 2000. "Agglomeration economies, firm heterogeneity, and foreign direct investment in the United States," Strategic Management Journal, Wiley Blackwell, vol. 21(12), pages 1175-1193, December.
    9. Andrew Eckert & Douglas West, 2004. "Rationalization of Retail Gasoline Station Networks in Canada," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 1-25, October.
    10. Holmberg, Stevan R. & Morgan, Kathryn Boe, 2003. "Franchise turnover and failure: New research and perspectives," Journal of Business Venturing, Elsevier, vol. 18(3), pages 403-418, May.
    11. Folta, Timothy B. & Cooper, Arnold C. & Baik, Yoon-suk, 2006. "Geographic cluster size and firm performance," Journal of Business Venturing, Elsevier, vol. 21(2), pages 217-242, March.
    12. Blair,Roger D. & Lafontaine,Francine, 2011. "The Economics of Franchising," Cambridge Books, Cambridge University Press, number 9780521775892.
    13. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    14. Andrew Eckert & Douglas West, 2008. "Firm Survival and Chain Growth in a Privatized Retail Liquor Store Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(1), pages 1-18, February.
    15. Hosken, Daniel S. & McMillan, Robert S. & Taylor, Christopher T., 2008. "Retail gasoline pricing: What do we know?," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1425-1436, November.
    16. Karl Wennberg & Göran Lindqvist, 2010. "The effect of clusters on the survival and performance of new firms," Small Business Economics, Springer, vol. 34(3), pages 221-241, April.
    17. Orley Ashenfelter & David Ashmore & Jonathan Baker & Suzanne Gleason & Daniel Hosken, 2006. "Empirical Methods in Merger Analysis: Econometric Analysis of Pricing in FTC v. Staples," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(2), pages 265-279.
    18. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
    19. Audretsch,David B. & Thurik,Roy (ed.), 1999. "Innovation, Industry Evolution and Employment," Cambridge Books, Cambridge University Press, number 9780521641661.
    20. Andrew Eckert & Douglas West, 2008. "Radius Restrictions on Retail Chains and the Similarity of Neighboring Shopping Centers," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(3), pages 281-300.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yun Jeong Choi & Jee Young Kim & Min Hee You, 2020. "Radius Restriction And Firms' Survival: Evidence From The Coffee Franchise Industry," Contemporary Economic Policy, Western Economic Association International, vol. 38(3), pages 496-514, July.
    2. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2014. "Supermarket Entry and the Survival of Small Stores," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 73-93, February.
    3. Nilsson, Pia, 2016. "The influence of related and unrelated industry diversity on retail firm failure," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 219-227.
    4. Zipitría, Leandro, 2011. "Impacto económico del Supermercadismo [The Economics of Supermarkets: A Brief Literature Review]," MPRA Paper 28419, University Library of Munich, Germany.
    5. Filippo Randelli & Giorgio Ricchiuti, 2015. "The Survival of Tuscan Firms," Working Papers - Economics wp2015_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    6. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2009. "Supermarket Entry and its effect on small stores in Montevideo, 1998 to 2007," Documentos de trabajo 2009005, Banco Central del Uruguay.
    7. Andrew Eckert & Douglas West, 2008. "Firm Survival and Chain Growth in a Privatized Retail Liquor Store Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(1), pages 1-18, February.
    8. Raffaella Sadun, 2015. "Does Planning Regulation Protect Independent Retailers?," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 983-1001, December.
    9. Fabiano Schivardi & Eliana Viviano, 2011. "Entry Barriers in Retail Trade," Economic Journal, Royal Economic Society, vol. 121(551), pages 145-170, March.
    10. Florin Maican & Matilda Orth, 2017. "Productivity Dynamics and the Role of ‘Big-Box’ Entrants in Retailing," Journal of Industrial Economics, Wiley Blackwell, vol. 65(2), pages 397-438, June.
    11. Anet Weterings & Orietta Marsili, 2015. "Spatial Concentration of Industries and New Firm Exits: Does this Relationship Differ between Exits by Closure and by M&A?," Regional Studies, Taylor & Francis Journals, vol. 49(1), pages 44-58, January.
    12. Charlotte Senftleben-König, "undated". "Product Market Deregulation and Employment Outcomes: Evidence from the German Retail Sector," BDPEMS Working Papers 2014009, Berlin School of Economics.
    13. Basker, Emek, 2011. "The Causes and Consequences of Wal-Mart’s Growth," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 110-134.
    14. Nathan Yang, 2011. "An Empirical Model of Industry Dynamics with Common Uncertainty and Learning from the Actions of Competitors," Working Papers 11-16, NET Institute.
    15. Hahn Shik Lee & Jinhwa Chung & Woohyoung Kim, 2020. "Economic Effect of Zoning Regulations on Korea's Small and Medium‐Sized Retailers," Asian Economic Journal, East Asian Economic Association, vol. 34(2), pages 185-211, June.
    16. Kosová, Renáta & Lafontaine, Francine, 2012. "Much ado about chains: A research agenda," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 303-308.
    17. Schivardi, Fabiano & Pozzi, Andrea, 2015. "Entry Regulation in Retail Markets," CEPR Discussion Papers 10836, C.E.P.R. Discussion Papers.
    18. Daniel Hanner & Daniel Hosken & Luke M. Olson & Loren K. Smith, 2015. "Dynamics in a Mature Industry: Entry, Exit, and Growth of Big‐Box Grocery Retailers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 22-46, March.
    19. Sanchez-Vidal, Maria, 2019. "Retail shocks and city structure," LSE Research Online Documents on Economics 103394, London School of Economics and Political Science, LSE Library.
    20. Sam Tavassoli & Viroj Jienwatcharamongkhol & Pia Arenius, 2023. "Colocation of Entrepreneurs and New Firm Survival: Role of New Firm Founder’s Experiential Relatedness to Local Entrepreneurs," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1421-1459, July.

    More about this item

    Keywords

    radius restriction; business territory; competition; survival analysis; franchise; Cox regression model; coffee industry;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:yon:wpaper:2017rwp-115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: YERI (email available below). General contact details of provider: https://edirc.repec.org/data/eryonkr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.