East Asian Economic Review
- Volume 16 Issue 3
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- Pages.249-272
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- 2012
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- 2508-1640(pISSN)
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- 2508-1667(eISSN)
Asymmetric Price Differential between Medium and Small Class Cars across Countries: A Case Study - Korea and the U.S.
- Lee, Woong (Center for Emerging Economies Research Korea Institute for International Economic Policy) ;
- Hong, Hyung Ju (Competition Policy Bureau Korea Fair Trade Commission)
- Received : 2012.08.20
- Accepted : 2012.09.28
- Published : 2012.09.30
Abstract
This paper examines how a Korean automobile firm price-discriminates between the Korean and the U.S. markets. We argue that a Korean automobile firm's pricing behavior depends on the differences in price elasticity over the segmented markets between the countries. Our findings are that differences in price elasticity may help explain why a medium-class car's price is higher in Korea than that in the U.S. while a small-sized car's price is higher in the U.S. than in Korea, which implies that a Korean automobile firm
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