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This study aims to empirically examine the impact of the price structure of two-sided markets on transaction volume and market share (MS) in the context of the Korean credit card industry. The Korean credit card market differs from those in the United States (U.S.) or Europe in terms of transaction structure (i.e. a three-party system in Korea vs a four-party system in the U.S. or Europe) and government policy. In addition to the merchant discount rate and the cardholder annual membership fee rate, the authors included and analyzed exogenous variables to eliminate any endogeneity. Based on the analysis results, the authors found that credit card usage performance (i.e. transaction volume) increases with an increase in the relative price ratio (merchant discount rate ÷ cardholder membership fee rate) paid by merchants and cardholders, provided that the total price (merchant discount rate + cardholder membership fee rate) paid by merchants and cardholders remains constant. Therefore, this study is the first to confirm that the Korean credit card market operated as the theoretical mechanism of a two-sided market during the analysis period. This effect can only be observed in specific cases such as the launch of the so-called “Chief Executive Officer(CEO)-designed card.” When a new CEO takes office in a credit card company and launches a “CEO-designed card,” there is a significant increase in not only card usage performance but MS as well owing to the price structure changes caused by expanding the benefits that customers derive from card use.

Cross-country studies have shown that higher costs to starting a business tend to reduce entrepreneurship (Chambers and Munemo, 2019) and that an unfavorable environment for business can increase poverty and income inequality (Chambers et al., 2019a; Djankov et al., 2018). Building on the current literature, the authors test whether barriers to starting a business at the state and city level in the USA are associated with changes in entrepreneurship and income inequality.

Measures of entrepreneurship (establishment entry rate and exit rate) are regressed on measures of barriers to entry in a cross-section of 50 states as well as a cross-section of 73 cities in the USA. Further, the authors regress measures of income inequality on measures of barriers to entry using the same two cross-sections. State level data on barriers to entry are from Teague (2016), published in the Journal of Entrepreneurship and Public Policy. City level data on barriers to starting a business are from the Doing Business in North America (DBNA) dataset.

Results show that there is a negative and significant association between barriers to starting a business and the rate of firm exit. A standard deviation increase in barriers to entry is associated with a five percent decrease in the firm exit rate at the state level. The authors find only limited evidence that barriers to entry are associated with income inequality.

Despite a large volume of scholarship on how regulation and barriers to entry influence entrepreneurship, no study (to the authors’ knowledge) has investigated how general entry regulation affects the entry or exit rate of establishments at the state or municipal level in the USA.