The new regulation was introduced to the franchise market of South Korea in that an applicant who wants to be a franchiser must set up direct retail stores and run them for at least one year before recruiting franchisees. Considering the purpose of the regulation, it is inferred that once franchisers run their own stores, their franchisees would be better off than otherwise. This paper addresses one reason that the Korea Fair Trade Commission has no choice but to introduce the regulation. Along the line, this paper investigates whether franchisees would have the more likelihood to make profit in the case of that franchisers operate their own stores. The result demonstrates that this case could be true since the operation of franchiser owned stores could be helpful in reducing cost of franchisees.

This paper detects bidding behaviors in the auction with the random cutoff, where a winning bid needs to be above and the closest to the random cutoff. In this auction, each bidder is eager to predict the random cutoff in order to use the predicted random cutoff as bid. Furthermore, one of deep learning models, the transformer model is employed as one empirical method to anticipate the random cutoff. The result shows that the predicted random cutoff turns out to be a winner with probability of about 20 percent. This paper contributes to economic literature in terms of investigating the connection between a deep learning model and an auction based on the economic theory.