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

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.

The Effect of COVID-19 on the Efficiency of Intercity Bus Operation: The Case of Chungnam

This paper estimates the efficiency of operating intercity bus lines in Chungnam province over the period 2017–2020, and then empirically analyzes the determinants of the efficiency. In particular, it evaluates to what extent the efficiency in 2020 decreased due to COVID-19 and which characteristics of lines (length of a line, frequency of operation, whether a line operates via highways and includes the capital region or not) affected the efficiency during the pandemic through a tobit model. The empirical results show that the efficiency in the operation of intercity bus lines in Chungnam was higher in 2018 and 2019 compared to 2017, but dropped in 2020 by 15.8%. It appears that the efficiency is higher when a line operates more frequently and covers a longer distance, but the efficiency increases at a decreasing rate as the operating distance becomes longer. In addition, the difference in the efficiency according to operating distance due to COVID-19 seems to be statistically significant. Given that intercity bus lines are heavily dependent upon a (local) government’s financial support and the amount of this support needs to reflect the degree to which the efficiency has decreased due to COVID-19 as an external shock, it is important to precisely estimate the magnitude of the efficiency reduction from both a policy and academic standpoint.