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RADIUS RESTRICTION AND FIRMS' SURVIVAL: EVIDENCE FROM THE COFFEE FRANCHISE INDUSTRY
Author(s) -
Choi Yun Jeong,
Kim Jee Young,
You Min Hee
Publication year - 2020
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12458
Subject(s) - franchise , competition (biology) , commission , hazard , business , hazard ratio , agricultural economics , economics , marketing , confidence interval , finance , mathematics , ecology , chemistry , statistics , organic chemistry , biology
This study investigates the effects of distance restrictions on Korean coffee shops' survival. Restrictions were implemented by South Korea's Fair Trade Commission to limit the headquarters' opening of new shops to protect franchisees' territorial rights. Using extended Cox proportional hazard regression analyses, we find that the hazard rates of all coffee shops decreased significantly under the radius restriction, with more substantial decreases for young stores, attenuating over store ages. However, selective restrictions on five big brands influencing interbrand competition might have changed the coffee franchise industry's landscape and thereby widening the gap between exempted brand coffee shops and the rest. ( JEL D22, L40, L66)