Entry Regulations with Implementation Lag : Evidence from the Convenience Store Markets in Korea

In order to advance incumbent businesses’ interests by weakening the competition in the convenience store market, Seocho county in Korea legislated a regulation impeding the opening of new convenience stores. The regulation intensified proximity restrictions between stores. Our finding shows, however, the legislation condemned incumbent businesses to unfavorable first-one- and first-two-years’ survival probabilities. Incumbent stores in relatively more densely populated areas suffered more. We provided supporting evidence that so-called implementation lags – time lags between announcement and implementation of policies – and adaptive behaviors of potential store owners may have caused the unintended consequences. Our findings imply that implementation lag and economic agents’ adaptive behaviors should be a policymaker’s consideration