• KDI Journal of Economic Policy
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• v.33 no.3
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• pp.33-55
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• 2011

Market concentration in the Korean banking industry has markedly increased since the financial crisis of 1997-1998 because of M&As, P&As, and consolidation of banks. With this change, there has been a growing concern over market power in the Korean banking sector. We examine the effects of market concentration on bank efficiency and competition for the period of 1992-2006. Three different indicators of bank inefficiency are used in this study, including X-inefficiency that is derived from the directional technology distance function. The level of competition is measured by both the H-statistic of the Panzar-Rosse model and the level of the net interest margin and its standard deviation. Empirical results indicate that market concentration has not improved bank efficiency through scale economies or scope economies. Instead, recent mergers, acquisitions and consolidation of banks resulted in an increase in inefficiency measured by the three different indicators: X-inefficiency, labor inefficiency and asset inefficiency. While an increase in market share of individual banks improved bank efficiency, an increase in the overall market concentration ratio resulted in lower efficiency. Our study also finds that the Korean banking sector has been monopolistically competitive throughout the sample period except for the crisis period according to the H-statistic. Although an increase in market concentration ratio has not changed the overall level of bank competition, it has a positive significant effect on the level of the average interest margin.

• Korean Journal of Air-Conditioning and Refrigeration Engineering
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• v.29 no.10
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• pp.551-557
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• 2017

Most European economies, Japan, and many governments have made it a major policy to expand the green business by disseminating heat pump technology, which has a large $CO_2$ reduction effect. The heat pump of all heat sources has been recognized as renewable energy and the policy to encourage has been implemented. In the recently revised Renewable Energy Law, the hydrothermal source (surface sea water) heat pump was newly included in renewable energy. In addition, the scope of application of heat pumps has expanded in the mandatory installation of renewable energy for new buildings, remodeling buildings, and reconstructed buildings based on this law. However application to heat pumps using all natural energy as heat source has been put off. In this revision, the ratio of renewable energy to the total energy produced by the heat pump was fixed at 73%, which depends on coefficient of performance of heat pump. The ratio of renewable energy is $1-1.8/COP_H$, and should be calculated including the coefficient of performance of the heat pump. Using a high efficiency heat pump or a high-temperature heat source increases the coefficient of performance and also reduces $CO_2$ emissions. It is necessary to expand the application of heat pumps as renewable energy equipment and to improve the correct calculation of renewable energy production.

• Journal of the Economic Geographical Society of Korea
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• v.12 no.3
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• pp.277-290
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• 2009

This paper aims to draw essential facts of network city, to analyze the urban corridor in South-East region, Korea, as a network city. Firstly, the characteristics of the network city is examined theoretically. The global economy is developing an innovative class of network cities. A network cities evolve when two or more previously independent cities, potentially complementary in function, strive to cooperate and achieve significant scope economies aided by-fast and reliable transport and communications infrastructure. Network Cities place a higher priority on knowledge-based activities like research, education and the creative arts. Each constituting city stands to benefit from the synergies of interactive growth via reciprocity, knowledge exchange and unexpected creativity. Secondly, we discussed the network structure of cities in South-East region, Korea itself intensively. We survey the network location and outline of the urban corridor in South-East region, spatial specialization and interaction between the constituting cities. We also discussed the problems of the network cities in South-East region, Korea and introduced the desirable policies and alternatives. We can ascertain from the case study of cities in South-East region that the cities in South-East region corresponds the network city model fairly.

• Journal of Environmental Policy
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• v.6 no.4
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• pp.103-127
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• 2007

This study presents the political economics models to explore the political landscape of special interest groups influencing the government's decision making process for implementing international environmental standard. Starting with the popular menu-auction types of lobbying frameworks in the literature, the study extends its scope of research to multi-principal and multi-agency based international interest group politics and its hybrid case in order to bring the interaction of the relevant interest politics to the fore. Within a specific factor model of international trade between 2 small open economies, we compare the political equilibrium environmental standards in different institutional frameworks which can be feasible in the sense of recently growing role of environmental interest group. Although the conventional finding suggests that cooperative bargaining between the two countries can attain the globally optimal level of the standard, the paper rather explains that the cooperation between the national interest groups and the hybrid case also generate the stricter standard then national interest politics usually do.

• Environmental and Resource Economics Review
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• v.17 no.4
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• pp.751-774
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• 2008

In this paper, we examine the institutional prices differences in the electricity and natural gas industries using unbalanced panel data from 1999 to 2001. The changing market structures following deregulation in both markets allow us to examine the institutional prices differences by ownership type, market structure and merger activities. Estimating the reduced form, after controlling both intrinsic characteristic (marginal costs) and external factors (demand), allows us to identify the extent to which specific factors are correlated with the price. Furthermore it allows us to identify systematic institutional price differences in both electricity and natural gas markets. Our estimation results suggest that the private firms in electricity markets are associated with higher prices than public firms after controlling for demand and cost. We further find that dual-product firms in the natural gas industry and the electricity industry are associated with lower rates than single product firms. These results provide a weak evidence of economies of scope in the dual-product firms. Our results finally suggest that merger activities in natural gas markets are associated with higher rates.

• KDI Journal of Economic Policy
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• v.12 no.3
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• pp.71-94
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• 1990

This paper reviews the rationale of monetary and banking intervention by an outside authority, either the government or the central bank, and seeks to delineate clearly the optimal limits to the monetary and banking deregulation currently underway in Korea as well as on a global scale. Furthermore, this paper seeks to establish an objective and balanced view on the role of the central bank, especially in light of the current discussion on the restructuring of Korea's central bank, which has been severely contaminated by interest-group politics. The discussion begins with the recognition that the modern free banking school and the new monetary economics are becoming formidable challenges to the traditional role of the government or the central bank in the monetary and banking sector. The paper reviews six arguments that have traditionally been presented to support intervention: (1) the possibility of an over-issue of bank notes under free banking instead of central banking; (2) externalities in and the public good nature of the use of money; (3) economies of scale and natural monopoly in producing money; (4) the need for macro stabilization policy due to the instability of the real sector; (5) the external effects of bank failure due to the inherent instability of the existing banking system; and (6) protection for small banknote users and depositors. Based on an analysis of the above arguments, the paper speculates on the optimal role of the government or central bank in the monetary and banking system and the optimal degree of monetary and banking deregulation. By contrast to the arguments for free banking or laissez-faire monetary systems, which become fashionable in recent years, monopoly and intervention by the government or central bank in the outside money system can be both necessary and optimal. In this case, of course, an over-issue of fiat money may be possible due to political considerations, but this issue is beyond the scope of this paper. On the other hand, the issue of inside monies based on outside money could indeed be provided for optimally under market competition by private institutions. A competitive system in issuing inside monies would help realize, to the maxim urn extent possible, external economies generated by using a single outside money. According to this reasoning, free banking activities will prevail in the inside money system, while a government monopoly will prevail in the outside money system. This speculation, then, also implies that the monetary and banking deregulation currently underway should and most likely will be limited to the inside money system, which could be liberalized to the fullest degree. It is also implied that it will be impractical to deregulate the outside money system and to allow market competition to provide outside money, in accordance with the arguments of the free banking school and the new monetary economics. Furthermore, the role of the government or central bank in this new environment will not be significantly different from their current roles. As far as the supply of fiat money continues to be monopolized by the government, the control of the supply of base money and such related responsibilities as monetary policy (argument(4)) and the lender of the last resort (argument (5)) will naturally be assigned to the outside money supplier. However, a mechanism for controlling an over-issue of fiat money by a monopolistic supplier will definitely be called for (argument(1)). A monetary policy based on a certain policy rule could be one possibility. More importantly, the deregulation of the inside money system would further increase the systemic risk inherent in the current fractional banking system, while enhancing the efficiency of the system (argument (5)). In this context, the role of the lender of the last resort would again become an instrument of paramount importance in alleviating liquidity crises in the early stages, thereby disallowing the possibility of a widespread bank run. Similarly, prudential banking supervision would also help maintain the safety and soundness of the fully deregulated banking system. These functions would also help protect depositors from losses due to bank failures (argument (6)). Finally, these speculations suggest that government or central bank authorities have probably been too conservative on the issue of the deregulation of the financial system, beyond the caution necessary to preserve system safety. Rather, only the fullest deregulation of the inside money system seems to guarantee the maximum enjoyment of external economies in the single outside money system.

• KDI Journal of Economic Policy
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• v.14 no.3
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• pp.23-48
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• 1992

The Korea's Consumer electronics industry has exhibited a spectacular growth in the last three decades, expanding into one of the most important industries in Korea in many respects. One interesting aspect of the industry is the dominant role played by the Big Three of the industry, Gumsung, Samsung, and Daewoo. Since 1984, the three companies have accounted for about 90% of the sales in key items such as color TV, VTRs, refrigerators, and washers. The Big Three not only dominated the manufacturing stage, but also the distribution stage of the industry through their networks of exclusive dealers that constitute the major part of the distribution market. In this study, we analyzed the effects of the exclusive dealing by the Big Three on the efficiency of the Korean economy. We find that exclusive dealing by the Big Three could seriously constrain competition in both the manufacturing and distribution stages of the industry. Exclusive dealing by the Big Three effectively forcecloses the market for most other manufacturers as well as deterring entry into the manufacturing stage by potential entrants. Further, it impedes the growth of distributors that achieve the economies of scale and scope and restricts competition by the Big Three. In contrast, we could find little evidence that exclusive dealing by the Big Three is pro-competitive or enhances welfare. As a remedy to this problem, we suggest that the Fair Trade Commission of Korea should regulate the exclusive dealing by the Big Three, thus opening the door for the growth of distributors that are not bound by an exclusive dealing relationship with any of the Big Three. Put differently, we urge the Korean Fair Trade Commission to apply the Article 23 (5) to the exclusive dealing by the Big Three. Article 23 (5) that states that unfair restrictive dealing is illegal has never been clarified by the FTC. We believe that our analysis could also serve as a basic for the clarification of the article in general.

• Journal of the Korean Data Analysis Society
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• v.20 no.6
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• pp.3087-3099
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• 2018

Due to the constant changes of companies' global networks, the expansion of global e-commerce as well as the market-oriented global supply chain management, global enterprises are strategically selecting and entering into viable countries able to become global footholds. Therefore, this study aims to scrutinize the trend of changes in the global networks of Korean companies by analyzing the current overseas countries over the past decade. From the analysis, it has been found that there is a significant difference in the priorities of targeting countries among shipping, manufacturing and logistics companies. Logistics companies preferred to enter Germany first while they attached to a lower priority to Singapore. Manufacturing companies had a lower priority to advance to India, while they preferred to advance to Mexico; however, shipping companies were analyzed to prefer to enter the US. In addition, all of these companies identified the importance of securing volume and network by entering overseas markets to achieve economies of scale and scope and to maintain global competitiveness. Joint overseas expansion of manufacturers with shipping and logistics companies can be recommended to facilitate the entry and thus, enhance global competitiveness and service capabilities and also secure new growth engines.

• Journal of the Korean association of regional geographers
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• v.7 no.2
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• pp.17-34
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• 2001

This paper is to analyze how firms in a large firm-led industrial city have carried out the restructuring in the face of radical shifts, with focus on the strategy and the restructuring of firms in Ulsan, a typical industrial district in Korea that is specialized in heavy & chemical industry. It has been well known that the local economy has been led by a small number of large firms, including affiliates of chaebol, and its industrial structure has also been characterised as a clear dichotomy between large firms as a customer and small and medium-size firms as a supplier, which can be called not horizontal but vertical relations. It can identify some tendencies, however, that local companies have been rather dynamically changing in response to increasingly turbulent environment since the Asian crisis. Some are radical, but some incremental. These can be summarized in four distinctive but interlinked ways. First, more than half of local companies surveyed have attempted to change their production systems, mainly from the fordist mass production towards the flexible mass production, seeking both economies of scale and scope. Second, local firms have vigorously continued to reorganize the boundary of the production and the organization, by specializing products and focusing on the core competence in order to save costs and cope with radically changing customer demands in a flexible way. Third, there have been various strategies for the organizational innovation such as the introduction of team organization, the boundary blurring between the managerial and production workers and the intra-firm spin-offs, so as to improve managerial efficiency and competence in the use of internal labour market. Finally, they have tried to be more sensitive to the market and customers. These tendencies seem to be increasingly critical to sustain their competitiveness. To do so, they tend to focus increasingly not only on the competing via the product quality rather than through price, but also to seek to diversify the market and customer firms beyond national boundary.

• Journal of Distribution Science
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• v.10 no.7
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• pp.33-41
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• 2012

The purpose of this study is to analyse the state of the energy industry and to determine the efficiency of its functioning on the basis of energy conservation principle and application of innovative technologies aimed at improving the ecological modernisation of agricultural sectors of Kazakhstan. The research methodology is based on an integrated approach of financial and economic evaluation of the effectiveness of the investment project, based on calculation of elasticity, total costs and profitability, as well as on comparative, graphical and system analysis. The current stage is characterised by widely spread restructuring processes of electric power industry in many countries through introduction of new technical installations of energy facilities and increased government regulation in order to enhance the competitive advantage of electricity market. Electric power industry features a considerable value of creating areas. For example, by providing scientific and technical progress, it crucially affects not only the development but also the territorial organisation of productive forces, first of all the industry. In modern life, more than 90% of electricity and heat is obtained by Kazakhstan's economy by consuming non-renewable energy resources: different types of coal, oil shale, oil, natural gas and peat. Therefore, it is significant to ensure energy security, as the country faces a rapid fall back to mono-gas structure of fuel and energy balance. However, energy resources in Kazakhstan are spread very unevenly. Its main supplies are concentrated in northern and central parts of the republic, and the majority of consumers of electrical power live in the southern and western areas of the country. However, energy plays an important role in the economy of industrial production and to a large extent determines the level of competitive advantage, which is a promising condition for implementation of energy-saving and environmentally friendly technologies. In these circumstances, issues of modernisation and reforms of this sector in Kazakhstan gain more and more importance, which can be seen in the example of economically sustainable solutions of a large local monopoly company, significant savings in capital investment and efficiency of implementation of an investment project. A major disadvantage of development of electricity distribution companies is the prevalence of very high moral and physical amortisation of equipment, reaching almost 70-80%, which significantly increases the operating costs. For example, while an investment of 12 billion tenge was planned in 2009 in this branch, in 2012 it is planned to invest more than 17 billion. Obviously, despite the absolute increase, the rate of investment is still quite low, as the total demand in this area is at least more than 250 billion tenge. In addition, industrial infrastructure, including the objects of Kazakhstan electric power industry, have a tangible adverse impact on the environment. Thus, since there is a large number of various power projects that are sources of electromagnetic radiation, the environment is deteriorated. Hence, there is a need to optimise the efficiency of the organisation and management of production activities of energy companies, to create and implement new technologies, to ensure safe production and provide solutions to various environmental aspects. These are key strategic factors to ensure success of the modern energy sector of Kazakhstan. The contribution of authors in developing the scope of this subject is explained by the fact that there was not enough research in the energy sector, especially in the view of ecological modernisation. This work differs from similar works in Kazakhstan in the way that the proposed method of investment project calculation takes into account the time factor, which compares the current and future value of profit from the implementation of innovative equipment that helps to bring it to actual practise. The feasibility of writing this article lies in the need of forming a public policy in the industrial sector, including optimising the structure of energy disbursing rate, which complies with the terms of future modernised development of the domestic energy sector.