From the article it looks like the local government was what kept Dollar General out of a town after seeing what happened to a neighboring town that gave Dollar General some breaks to come in. So local government, while it did make a bad decision in the first town, made the opposite decision in the second town.

A question the article doesn't explore is what effect government policies and actions at higher levels (county, state, federal) have on the ability of a large chain like Dollar General to drive out local competitors. It might well be that getting government out of business, in the sense of stopping it from playing favorites, at those higher levels would be a net benefit.