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Protecting Small-Scale Enterprises: Evidence from the Korean Ready-Mixed Concrete Industry

Author

Listed:
  • Hyunbae Chun

    (Sogang University)

  • Hailey Hayeon Joo

    (Sogang University)

  • Jisoo Kang

    (Korea Culture and Tourism Institute)

  • Soo Hyung Kim

    (Korea Labor Institute & Sogang University)

Abstract

Korea revived its small-scale industry (SSI) reservation policy in the early 2010s to protect small businesses and promote their competitiveness. However, whether this size-contingent entry regulation causes allocative inefficiency remains a subject of debate. This study examines the effects of SSI reservation on both the performance of small plants and allocative efficiency in the Korean ready-mixed concrete industry. By exploiting the exogenous variation in preexisting large plants across geographically independent markets, we find that the SSI policy increases the average productivity of small plants in the affected markets. However, the policy decreases competition, thereby causing allocative inefficiency in the reserved industries.

Suggested Citation

  • Hyunbae Chun & Hailey Hayeon Joo & Jisoo Kang & Soo Hyung Kim, 2023. "Protecting Small-Scale Enterprises: Evidence from the Korean Ready-Mixed Concrete Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(1), pages 73-95, August.
    • Handle: RePEc:kap:revind:v:63:y:2023:i:1:d:10.1007_s11151-023-09905-1
    DOI: 10.1007/s11151-023-09905-1
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    More about this item

    Keywords

    Small-scale industry reservation; Ready-mixed concrete industry; Entry regulation; Allocative inefficiency;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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