Effect of Agglomeration Externalities of Adjacent Retail Areas on Commercial Business Continuity in Seoul, Korea

Abstract

This study investigates the relationship between commercial business continuity and regional characteristics, specifically, agglomeration externalities, in Seoul, South Korea, while accounting for random effects. Key findings reveal that, first, specialized retail areas experience lower closure probabilities. Second, increased related diversity increases closure probabilities, whereas higher unrelated diversity reduces them, illustrating the impact of diversity on continuity. Third, when comparing the agglomeration externalities of retail areas and their surroundings, higher unrelated diversity in the surrounding areas increases the probability of closure. Fourth, commercial development in surrounding areas, rather than within retail areas, enhances overall functionality and reduces closure probability. These results examine the positive and negative effects of agglomeration externalities on commercial businesses in Seoul, South Korea, presenting findings that specifically reflect the characteristics of the surrounding areas. In the context of future sustainable urban management, retail area management should be based on a macroscopic perspective that includes surrounding areas.