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

Yun Jeong Choi, Jee Young Kim () and Min Hee You
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Yun Jeong Choi: Yonsei University
Min Hee You: Yonsei University

No 2017rwp-115, Working papers from Yonsei University, Yonsei Economics Research Institute

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.

Keywords: radius restriction; business territory; competition; survival analysis; franchise; Cox regression model; coffee industry (search for similar items in EconPapers)
JEL-codes: D21 L20 R11 (search for similar items in EconPapers)
Pages: 33pages
Date: 2017-10
New Economics Papers: this item is included in nep-ent and nep-geo
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Persistent link: https://EconPapers.repec.org/RePEc:yon:wpaper:2017rwp-115

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