Protecting Small-Scale Enterprises: Evidence from the Korean Ready-Mixed Concrete Industry

초록

Korea revived its small-scale industry (SSI) reservation policy in the early 2010s to protect small businesses and promote their competitiveness. However, whether this size-contingent entry regulation causes allocative inefficiency remains a subject of debate. This study examines the effects of SSI reservation on both the performance of small plants and allocative efficiency in the Korean ready-mixed concrete industry. By exploiting the exogenous variation in preexisting large plants across geographically independent markets, we find that the SSI policy increases the average productivity of small plants in the affected markets. However, the policy decreases competition, thereby causing allocative inefficiency in the reserved industries.

키워드