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

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  • 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
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    References listed on IDEAS

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    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

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