• Health Policy and Management
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• v.13 no.4
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• pp.84-98
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• 2003

This research objective is to determine the optimal price break points for n­block tariff, because comparing non­linear pricing with uniform pricing on the basis of profit, n­block tariff outperforms two­part tariff, all unit discount price schedule, and uniform pricing. Although the merits of non­linear pricing are well documented, the attempt to practice the non-linear pricing in medical service sector has been relatively rare. The determination of the parameters under n­block tariff is the interesting decision making agenda for marketers. Under n­block tariff, the marketers should decide the optimal price break points and the optimal marginal price for each price zone. The results can be summarized as follows: The researchers found that mixture model can be the feasible methodology for determining the optimal number of n­block tariff and identifying the optimal segmentation criteria. We demonstrate the feasibility and the superiority of the mixture model by applying it to the database of medical examination. The results appear that the number of patients per month can be the optimal segmentation variable. And 6­block tariff is the optimal price break for this medical service.

• East Asian Economic Review
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• v.24 no.3
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• pp.237-252
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• 2020

This paper characterizes the optimal reciprocal trade policy in the environment of Melitz (2003) with firm productivity heterogeneity. In particular, without making parametric assumptions on firm productivity distribution, this paper derives the optimal degree of reciprocal tariff reductions that maximize the world welfare. A reciprocal import subsidy raises the industry productivity, lowering aggregate price; a reciprocal import tariff helps correct the markup distortion, increasing nominal income. With all the conflicting effects of import tariffs on welfare considered, the optimal degree of reciprocity in multilateral tariff reduction is shown to be free trade.

• International Area Studies Review
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• v.15 no.1
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• pp.59-86
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• 2011

This paper examines a country's strategic optimal tariff policy against a foreign firm with market power. That is, the purpose of the paper is, under asymmetric information, to reexamine the problem of optimal tariff policy against a foreign monopolist from another country's welfare standpoint. This is to extend the analysis of Brander and Spencer(1984) which is both analytic and elaborate. The incentive compatible tariff schedule is derived, and then policy implications are investigated. The main result is that, under incomplete information, the optimal tariff is elevated above its full-information counterpart in order to capture foreign rents. Moreover, it suggests that trade policies motivated by rent extraction are unlikely to be robust to the introduction of incomplete information. This research complements an existing literature on the strategic trade policy in terms of asymmetric information.

• Journal of Korea Trade
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• v.23 no.3
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• pp.84-104
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• 2019

Purpose - This paper explains why free trade agreements (FTAs) are more popular than customs unions (CUs) in respect of tariff coordination. Design/methodology - This paper employs an equilibrium theory of trade agreements with tariff coordination. I set up three-country partial equilibrium model with competing exporters. Domestic and exporting firms decide their optimal production under given tariffs and each country levies its tariff under the trade agreements. I found stability of implicit tariff coordination and preference of each country between an FTA and a CU. Findings - I demonstrate that two FTA members can keep their external tariffs higher than separately decided external tariffs by keeping the status-quo. This implicit tariff coordination can benefit each member through trade diversion. In a CU, each member country must have a common optimal external tariff and it must incur costs because each country may seek different external tariffs for their own national welfare. The benefit of implicit coordination in an FTA and the cost of explicit coordination in a CU account for the popularity of the FTA. Originality/value - This paper uses the idea of implicit tariff coordination in trade agreements. In a CU, tariff coordination is explicit and mandatory. All member countries must have a single common external tariff for each good. On the other hand, in an FTA, each country establishes its external tariff with the goal of maximizing its own welfare. However, each country can also coordinate "implicitly" by keeping the status-quo after establishing an FTA.

• Environmental and Resource Economics Review
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• v.14 no.1
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• pp.221-235
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• 2005

In this paper, we analyzed the dynamic structure of optimal tariff levied on importing non-renewable resources such as petroleum, iron, coal, etc. According to the previous literature that have studied this objective, the time inconsistent open loop tariff has been suggested to be imposed in order to improve the welfare level of importing country. We set up the efficient model to identify how to impose the optimal tariff over time. Based on this model, we have found that the previous literature ignored that the costate variable for the stock for non-renewable resource decomposed between the scarcity effect and the cost effect. On the basis of the role of costate variable, we, however, have found that the proposition of the previous literature has led into errors. Hence, we suggest that the dynamically consistent open loop tariff for non-renewable resources would improve the welfare level of importing country.

• The Transactions of The Korean Institute of Electrical Engineers
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• v.67 no.10
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• pp.1278-1285
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• 2018

For saving electricity bill, energy storage system(ESS) is being installed in factories, public building and commercial building with a Time-of-Use(TOU) tariff which consists of demand charge(KRW/kW) and energy charge(KRW/kWh). However, both of peak reduction and ESS special tariff are not considered in an analysis of initial cost payback period(ICPP) on ESS. Since it is difficult to reflect base rate by an amount of uncertain peak demand reduction during mid-peak and on-peak periods in the future days. Therefore, the ICPP on ESS can be increased. Based on this background, this paper presents the advanced analysis method for the ICPP on ESS. In the proposed algorithm, the representative days of monthly electricity consumption pattern for the amount of peak reduction can be found by the k­means clustering algorithm. Moreover, the total expected energy costs of representative days are minimized by optimal daily ESS operation considering both peak reduction and the special tariff through a mixed-integer linear programming(MILP). And then, the amount of peak reduction becomes a value that the sum of the expected energy costs for 12 months is maximum. The annual benefit cost is decided by the amount of annual peak reduction. Two simulation cases are considered in this study, which one only considers the special tariff and another considers both of the special tariff and amount of peak reduction. The ICPP in the proposed method is shortened by 18 months compared to the conventional method.

• Korea Trade Review
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• v.43 no.6
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• pp.215-238
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• 2018

Tariff reduction from FTAs are applied to imported goods, but not to traveler's goods. There are difficulties in meeting the FTA's conditions for free tariff application, such as origin of goods and direct transportation. This study suggests the optimal cut-off level of a simple tax rate applied to traveler's goods with respect to traveler' welfare and government tax revenue. Among three different scenarios of simple tax reductions by ordering its weighted magnitude of effects, the optimal tariff was found to be 2% applied to all goods. The effects of a 2% reduction of simple tax rate would increase traveler' welfare by 16.8 billion won and reduce tax revenue by only 0.34 billion won.

• Korea Trade Review
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• v.41 no.2
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• pp.29-60
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• 2016

Research and Development(R&D) investment is an issue of central importance in any economy. In this paper we analyze the relationship between R&D spillovers and trade-related variables, using a two-stage model where duopolists simultaneously decide on R&D in the first stage and engage in Cournot competition in the second stage. We characterized and compared the free-trade and trade-restriction R&D equilibrium in a two-stage game of R&D investment followed by Cournot market competition. We also assessed the impact of varying the R&D spillover on the equilibrium outcomes and tariff. We showed for both free trade and protection cases that there exists a unique symmetric solution(subgame perfect Nash equilibrium). As the solution, while analytical, cannot be stated in closed form, we resorted to numerical experiments to investigate the equilibrium results. Our estimates indicate for both free trade and protection cases that the level of R&D investment and the rate of R&D expenditure decrease as the degree of R&D spillovers increases, and that there is an inverse relation between the degree of R&D spillovers and level of protection. The latter implies that the larger the degree of R&D spillovers, the lesser the level of protection.

• The Transactions of the Korean Institute of Electrical Engineers
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• v.41 no.9
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• pp.994-1002
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• 1992

With regard to price elasticity and cross elasticity of electricity, optimal generation expansion planning method including load management effect is suggested. In addition, optimal peak time price can be determined simultaneously, and we adopt peak time tariff as load management strategy. Instead of using hourly marginal demand curves where we can get customer surplus, we used chronological load curve with constraints to preserve social welfare. This method is proved useful in short-term generation expansion planning.

• Environmental and Resource Economics Review
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• v.25 no.2
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• pp.255-276
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• 2016

This paper is designed to investigate the dynamic structure of optimal tariff imposed by the oil importing country from OPEC when OPEC increases the oil reserves through exploration and development. For this purpose, we used a Stckelberg differential game modeling approach, and tried to analyze two cases such that the one is the extraction cost is dependent on the oil reserves and the other is the extraction cost is independent of it. On the basis of this analysis, we propose that the importing contry has to impose dynamically inconsistent tariffs if the extraction cost is dependent on the oil reserves. Otherwise, she should impose dynamically consistent tariffs announced at initial time. In addition, we found that whether or not the exporting country uses some portion of oil produced for domestic consumption does not affect our policy proposition stated above.