Industry Structure of Commercial Districts and the Impact of COVID-19

Sung Hyo Hong, Junhong Im and Gyoungju Lee ()
Additional contact information
Sung Hyo Hong: Economics Department, Kongju National University, Gongju 32588, Republic of Korea
Junhong Im: Department of Urban∙Rural & Culture Research, Chungnam Institute, Gongju 32589, Republic of Korea
Gyoungju Lee: Department of Urban and Transportation Engineering, Korea National University of Transportation, Chungju 27469, Republic of Korea

Sustainability, 2023, vol. 15, issue 11, 1-11

Abstract: This paper aims to empirically analyze the difference in the closure rate of the commercial district according to the industry structure of the commercial district. Theoretically, the larger the number of stores in a commercial district, the greater the positive externality caused by the agglomeration economies in consumption, namely, the external economies of scale. However, the agglomeration economies could occur from comparison shopping or one-stop shopping, depending on the business structure of the commercial district. According to the empirical results of the regression analysis of all 1164 commercial districts in Korea, the more specialized a commercial district is by stores in a specific industry, the lower the closure rate of that commercial district. This means that the agglomeration economies in consumption are driven by comparison shopping rather than by one-stop shopping and implies that it is necessary to introduce incentives that allow stores in the same industry to cluster together in terms of policy. Meanwhile, if the closure is limited to a specific industry, it will cause an endogeneity problem since it affects the industry structure of the commercial district. Considering this, as a result of additional estimation by 2SLS and GMM using instrumental variables, the error in estimation due to the endogeneity problem was not large, confirming that COVID-19 corresponds to an overall external shock that is not limited to a specific industry. In addition, this paper presents diagnostic indicators for commercial districts to measure the impact of COVID-19. Through this, it will be possible to alleviate conflicts between social classes over compensation or subsidies for sanctions for quarantine. To the best of our knowledge, it is the first time to use all commercial districts in Korea for a research in evaluating the impact of COVID-19, and empirical results on agglomeration economies focusing on the consumption side are limited.

Keywords: COVID-19; agglomeration economies; comparison shopping; one-stop shopping; diagnostic index for commercial district (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/15/11/8905/pdf (application/pdf)
https://www.mdpi.com/2071-1050/15/11/8905/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:15:y:2023:i:11:p:8905-:d:1161151

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().