[5] How to Increase the Sales of Traditional Markets: Local Currency vs. Discount Coupon
     The Journal of Korean Public Policy, Dec.2023, 25 (4), pp.3-27​

[Abstract] This study compares two government subsidy schemes−the local currency and discount coupon−that aim to boost the sales of traditional markets but differ in the way of subsidizing consumer expenditure. The local currency subsidizes a certain percentage of the consumer’s total expenditure, whereas the discount coupon grants a fixed amount of value that can be exchanged for goods or services to the consumer when he spends a specific amount of money (i.e., spends money at more than one shop). When consumers are allowed to travel to multiple shops to buy goods under the framework of the Hotelling model, the two subsidy schemes have a different impact on promoting multi-purchasing. Unlike the local currency which applies to every consumer and makes no impact on increasing multi-purchasing no matter how many purchases consumers make, the discount coupon is given only to consumers who purchase from more than one shop, hence incentivizing multi-purchasing. As a result, the discount coupon achieves a (weakly) higher level of social welfare than the local currency in a sense that the increased volume of multi-purchasing arising under the discount coupon creates the additional sales of both shops, consequently generating a positive consumption value that otherwise cannot be achieved under the local currency.