• Journal of the Korean Regional Science Association
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• v.14 no.2
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• pp.51-64
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• 1998

This paper investigates how the factor inputs of firms are affected by the expectation about land-price increase in the future. We develope a two-factor (land and labor) model, in which expectation about land-price increase plays a key role in determining the "optimal" input level of labor and land. Expecting capital gains from input of the land when land price increases, firms input land up to the point where the marginal productivity of land falls short of the marginal cost of purchasing the land, in order to maximize the "joint-profit". That is, firms have an incentive to use more land than they do when capital gains are not expected. We mean joint-profit by profit in the standard sense plus capital gains. Once the land is input "excessively", the productivity of labor increase and labor is also input more, since land and labor are assumed as complementary in production. This mechanism works in the opposite direction when land price decrease. This paper suggests that land price fluctuation is a major destabilizer of an economy.or destabilizer of an economy.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.37 no.4
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• pp.145-153
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• 2014

In this paper, we study the bargaining strategy of a manufacturer who sells a product through the online and offline distribution channels. To do this, we derive and analyze the equilibrium solutions for both simultaneous and sequential bargaining games. The result shows that the optimal bargaining strategy heavily depends on the size of the online distribution channel's loyal customers and the difference between the retail prices of the online and the offline distribution channels. It is also shown that, in some cases, the online distribution channel has incentive to downsize its loyal customers and its retail price for a better bargaining outcome.

• KDI Journal of Economic Policy
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• v.44 no.1
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• pp.1-47
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• 2022

This paper introduces a politico-economic model with a welfare state and immigration. In this model, policies on taxes and immigration are determined through a plurality voting system. While many studies of fiscal implications of immigration argue that relaxing immigration policies can substitute for tax reforms in an aging economy, I show that the democratic voting procedure can dampen the effect of relaxing immigration policies as desired policy reforms are not always implemented by the winner of an election. This political economy results in three types of social welfare losses. First, the skill composition is not balanced at a socially efficient level because workers are motivated to maximize their wages. Second, older retirees implement excessive taxes to maximize the size of the welfare state. Third, the volume of immigration is lower than the optimal level given the incentive by young workers to regain political power in the future.

• The Journal of Fisheries Business Administration
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• v.42 no.3
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• pp.31-39
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• 2011

This paper attempts to extend such analysis to the rather more difficult problem of optimal management of transnational fish stocks jointly owned by two countries. Transboundary fish such as Mackerel creates an incentive to harvest fish before a competitor does and leads to over-exploitation. This tendency is especially poignant for transnational stocks since, in the absence of an enforceable, international agreement, there is little or no reason for either government or the fishing industry to promote resource conservation and economic efficiency. In the current paper I examine a game theoretic setting in which cooperative management can provide more benefits than noncooperative management. A dynamic model of Mackerel fishery is combined with Nash's theory of two countries cooperative games. A characteristic function game approach is applied to describe the sharing of the surplus benefits from cooperation and noncooperation. A bioeconomic model was used to compare the economic yield of the optimal strategies for two countries, under joint maximization of net benefits in joint ocean. The results suggest as follows. First, the threat points represent the net benefits for two countries in absence of cooperation. The net benefits to Korea and China in threat points are 2,000 billion won(${\pi}^0_{KO}$) and 1,130 billion won(${\pi}^0_{CH}$). Total benefits are 3,130 billion won. Second, if two countries cooperate one with another, they reach the solution payoffs such as Pareto efficient. The net benefits to Korea and China in Pareto efficient are 2,785 billion won(${\pi}^0_{KO}$) and 1,605 billion won(${\pi}^0_{CH}$) or total benefits of 4,390 billion won : a gain of 1,260 billion won. Third, the different price effects under the two scenarios show that total benefit rise as price increases.

• Environmental and Resource Economics Review
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• v.29 no.1
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• pp.91-111
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• 2020

While the renewable energy portfolio standard (RPS) is in place to expand the scale of renewable energy generation, the power producer can obtain the renewable energy credit (REC) and use it as an incentive to operate the facility. RECs secured by solar power generation can be traded through spot market or fixed price contracts, and, in the spot market trading, power producers are exposed to the uncertainty of REC spot price. In this study, real option analysis is conducted to analyze the optimal threshold of REC spot price for the conversion of REC trading method by power producer considering the uncertainty of REC spot price. We calculated the optimal threshold of REC spot price that can convert the trading method of REC from spot market to fixed price contract. In conclusion, the spot market trading is a rational trading method when considering the uncertainty of REC price, but the fixed price bidding is a rational trading method when not considering the uncertainty of REC price.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.12 no.20
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• pp.123-138
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• 1989

The primary objective of the agency research in the game theory lives in the maintenance of Pareto is optimal condition for the optimal incentive contract. The basic concepts which are related to this objective are reviewed in connection with the general assumptions to model it, the moral hazard and adverse selection which arised from the information asymmetry, and finally the problem of risk distribution. The demand for auditing and the role of auditor have been addressed by ASOBAC. Issues which an auditor is explicitly introduced in a principal-agent framework have been addressed in this paper. These issues must be confronted to appropriately with the auditor, and to achieve an adequate understanding of optimal confronting arrangement with the auditor. The first step in introducing an auditor into this analysis is to examine the game-theoretic foundation of such a expended agency model. The Mathematical program formulated may not yield solution that are resonable. This arises because the program may call for the auditor and manager to play dominated Nash equilibra in some subgame. The nontrivial natures of the subgame implies that randomized strategies by the auditor and manager nay be of crucial importance. The possibilities for overcoming the randomized strategy problem were suggested; change the rule of the game and or impose covexity condition. The former seems unjustifiable in on auditing context, and the latter promising but difficult to achieve. The discussion ended with an extension of the revelation principle to the owner manager-auditor game, assuming strategies. An examination of the restriction and improvement direction of the basic concept of agency theory was addressed in the later part of this paper. Many important aspects of auditor incentives are inherently multiple-agent, multiple-period, multiple-objectine, phenomena and require further analyses and researches.

• KDI Journal of Economic Policy
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• v.31 no.1
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• pp.207-237
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• 2009

One of the main problems in Korea's public assistance program, the NBLS (National Basic Livelihood Security), is that the loophole of welfare system is continuously growing. Living wage program is the largest sub-program of the NBLS, and the most important determinant of amount of living wage for each beneficiary is the level of reported income. Therefore, accurate and effective income detection is essential in improving policy effects and furthermore reducing the leakage of wage expenditure as beneficiaries always have an incentive to underreport their income. Since most of them do not pay income tax, the welfare authority should exert an independent effort to effectively detect their income. Considering that living wage is a special kind of income tax of which marginal tax rate is -1, one can apply a classical theory of tax evasion to understand illegal or excessive receipt of living wage caused by income underreporting. Utilizing a classical theory given by Alingham and Sandmo (1972), this paper provides a theoretical analysis of the optimal income reporting of the beneficiary. Then an optimization problem is constructed from the government's viewpoint to derive optimal income detecting device (auditing). This paper proves that cut-off discriminated auditing outperforms random auditing and cut-off auditing which implies if the government assigns a positive audit probability to every reported income less than a certain level and the probability is inversely proportional to the level of reported income, it can minimize underreporting and then gradually reduce the leakage of wage expenditure.

• The Journal of Society for e-Business Studies
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• v.17 no.2
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• pp.105-114
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• 2012

Recently, global warming, energy shortage, and environmental disruption have been serious problems in every nation. It became more and more important to reduce the emission of CO2 and to use of energy efficiently. Smart grid was also introduced using the rapidly developing information technology. It deployed the mutual communication concept between customers and the suppliers in the electricity supply. There were increasing demands to adopt the smart meter and to present incentive for efficient energy usage in many developed countries. The objective of this research was to develop the optimal real time pricing model which maximized the profit of the power retailer and reduced the usage of energy. The simulation study was given to show the usefulness of the model. Simulation considered the customer demand response rate and price elasticity rate. The price elasticity rate was compared in the condition of fixed value according to time and variable value according to the customers. The optimal price model could maximize the profit of the power retailer and reduce the energy usage of the consumers.

• The Transactions of The Korean Institute of Electrical Engineers
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• v.58 no.3
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• pp.455-461
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• 2009

This paper proposes Direct Load Control(DLC) operation scheme using a bidding system and the methodology to value proper quantity decided by the DLC program, which is a kind of resources for stabilization of electricity market price during peak times by managing consumer electricity demand. Since DLC program in Korea is based on the contract with the customers participating in this program, it is difficult to anticipate voluntary participation. That is, incentive for participants in DLC program is insufficient. To cope with this point, it is necessary to develop a new market mechanism and market compatible operation scheme for DLC programs. DLC market mechanism is deemed to be equipped with iterative bidding system, independent operation from energy market, and interactive with bidding information on energy market. With this market mechanism, it is important to find the optimal operation point of DLC allowing for the factors of stabilizing the electricity market price and compensating DLC implementation. This paper focuses on the mathematical approaches for the bid-based DLC operation scheme and examines several scenarios for the following technical justifications: 1) stabilization of electricity market price during peak times, 2) elasticity of demand.

• Health Policy and Management
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• v.19 no.1
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• pp.62-80
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• 2009

The purpose of this study was to examine the factors influencing the attitude toward the increasing role of private health insurance(PHI). In the Korea Welfare Panel Data 2007, a sample of 1,675 (adjusted by weight value: 1,607) respondents on an opinion on promoting PHI was used in the study. With independent variables including socio-demographic characteristics, health status, health-related behavior, and opinions on welfare service, ordered-probit model was used to analyze the attitude toward PHI. Negative opinion on the increasing role of PHI were responded by 54.6%(n=877) of the respondents, whereas 22.2%(n=373) were positive and 23.2%(n=357) were neutral. Old people, the better off, those with worse self-assessed health status, and those having an experience of health examination tend to have the positive attitude toward the increasing role of PHI. Women, those with chronic diseases or disorders and those who do not agree that comprehensive welfare benefits reduce work incentive showed negative attitude toward PHI. When comparing the needs for PHI before and after medical utilization, ex-ante need tends to strengthen the tendency to support private health insurance. This study will contribute to the discussion on the optimal mix of public and private health insurance in Korea by a better recognition of attitude toward PHI and health care system.