• Journal of the Korea Convergence Society
• /
• v.11 no.1
• /
• pp.131-139
• /
• 2020

Gamers switch their games to a new when get bored or encounter more attractive ones. Switching cost varies by gamers and depends on how they are satisfied with their current game. This study evaluates the satisfaction with current games as the miltiple basic psychological need in the self-determination theory and suggests 'needs-costs' causality research model that explain the variety of gamer's switching behavior. As the empirical test to domestic mobile gamers, the autonomy fulfillment to current game affect reversely with those of autonomy and relatedness. Those relationships between need satisfaction and perceptual switching cost vary according to their age and game genre preference. The results would be applied to understand gamers' switching behavior.

• Journal of Service Research and Studies
• /
• v.7 no.2
• /
• pp.17-41
• /
• 2017

The purpose of this research is to investigate the factors that impact customer satisfaction and loyalty in mobile payment services. Specifically, this research (1) studies the influence of company reputation on customer satisfaction and loyalty, (2) examines service quality dimensions that increase customer satisfaction, and (3) assesses switching barriers as moderators in influencing customer loyalty. Findings of this empirical research reconfirm the point of view that company reputation, service quality, and switching barriers are crucial for customer satisfaction in mobile payment services. The research methodologies that were used to verify the hypothesis in this study included customized surveys and structural equation modeling. The results demonstrated that company reputation significantly affects customer satisfaction and loyalty. Additionally, the results indicated that only two of the five total service qualities, ease of use and the security/privacy qualities, have positive influences on customer satisfaction. Customer satisfaction has also proven to be a significant influence on loyalty. Lastly, the results showed that among the factors of switching barriers, the factors of lost performance costs, sunk costs, setup costs, the attractiveness of alternatives, and service recovery have moderating effects on the relationships between customer satisfaction and loyalty. Base on the results, this research recommends that firms aim at devising integrated strategies that make switching barriers act as complements to customer satisfaction.

• Journal of the Korea Academia-Industrial cooperation Society
• /
• v.3 no.4
• /
• pp.325-332
• /
• 2002

In the process of designing pareto optimal insurance contract, it is necessary to assume that insurance contract conditions are endogenous to build a model. The expected utility, the non-expected utility and the state-dependent utility function can be applied as a insurance decision making principle. The insurance costs may have the linear, convex, and concave ralationship with the indemnity schedule. However, the sunk cost and fixed cost must be recognized. The deductible which decides whether an insurance contract to be a full or partial insurance contract can exist in the forms of straight deductible or diminishing deductible. Indeciding the level of deductible, the types of the insurance and the risks to be insured should be the deciding factors. Especially for recall insurance, there is relatively high chance that the recalling company being bankrupt. Therefore, the possibility of bankrupcy should be the considering factor in deciding the policy limit. The existence of the incomplete market and uninsurable background risk should be understood as restricting conditions of the pareto-optimal insurance contract.

• Environmental and Resource Economics Review
• /
• v.28 no.1
• /
• pp.39-59
• /
• 2019

The Korean Demilitarized Zone (DMZ) has the great ecosystem as all the artificial activities in DMZ have been prohibited over half a century. The ecosystem should be conserved even after the reunification of Korea and hence the conservation plan should be established not after the reunification but before it. It requires a considerable budget to conserve DMZ, considering management of ecology resource, recovery, and research. The objective of this paper is to analyze a fund-raising measure for DMZ conservation, using economic incentives mechanism when multiple developers participate in the auction to get the right to develop North Korean regions, have private information about their sunk costs and pay a part of their profits for the fund. First, we analyze the real option model to decide the optimal investment time. Second, we construct the auction for bidders not to misrepresent their private information, based on Bayesian Nash equilibrium.

• Korea Trade Review
• /
• v.43 no.1
• /
• pp.177-197
• /
• 2018

This paper aims to analyze the effects of external uncertainty on the entry modes decision of multinational firms. On the basic assumption that the entry modes of the firms are dependent on ex-ante or ex-post perceived risk, we empirically analyzed the impacts of perceived risk factors on the investment patterns of firms. We found that the larger the population, the higher the level of GDP per capita, and the larger the trade volume as a ratio of GDP resulted in increased M&A FDI and greenfield FDI. The economic growth rate variables were found to be significantly positive effect on only greenfield entry mode. Regarding the main variables, lower levels of corruption and increased stability regarding political issues resulted in the host country receiving increased M&A investment. However, we found only a positive statistical significance of the political stability variable on the explaining greenfield FDI. Results show that M&A entry mode is affected by both corruption and political instability level. However, the greenfield FDI featuring sunk costs, seems more responsive to political instability.

• Journal of Korean Society of Forest Science
• /
• v.111 no.1
• /
• pp.177-185
• /
• 2022

In this study, the economic feasibility of a local energy facility that uses forest biomass as an energy source was assessed. We analyzed profitability using data from the Forest Energy Self-sufficient Village Project financed by the Korea Forest Service. The energy facility has a cogeneration generator and wood chip boiler. Wood chip, which has lower heat value and is cheaper than wood pellets, is used as fuel. Revenue comes from the sale of electricity, heat, and renewable energy certificates. Additionally, we considered the sale of carbon credits as substitutes for fossil fuels. The expenditure consists of fuel costs and fixed costs, and the initial investment is treated as a sunk cost. Under the condition of a 55% operation rate and wood chip price of 95,000 KRW per ton, the annual net revenue is positive. Crucial factors for managing the facility sustainably are operation rate and fuel cost. A simulation in which two factors were changed showed that the annual net revenue is negative with a 50% operation rate and 100,000 KRW per ton of wood chip price. To improve net revenue, an increase in the operation rate or a decrease in the wood chip price is required. Additionally, selling carbon credits will make the operation of the facility more profitable. Furthermore, the payment required to procure wood chips could contribute to the rural economy. To foster the use of forest biomass for energy, the price for heat supplied from renewable energy sources should be subsidized.

• Journal of Distribution Science
• /
• v.10 no.2
• /
• pp.29-41
• /
• 2012

This paper undertakes a conceptual review of transaction cost to broaden the understanding of the transaction cost analysis (TCA) approach. More than 40 years have passed since Coase's fundamental insight that transaction, coordination, and contracting costs must be considered explicitly in explaining the extent of vertical integration. Coase (1937) forced economists to identify previously neglected constraints on the trading process to foster efficient intrafirm, rather than interfirm, transactions. The transaction cost approach to economic organization study regards transactions as the basic units of analysis and holds that understanding transaction cost economy is central to organizational study. The approach applies to determining efficient boundaries, as between firms and markets, and to internal transaction organization, including employment relations design. TCA, developed principally by Oliver Williamson (1975,1979,1981a) blends institutional economics, organizational theory, and contract law. Further progress in transaction costs research awaits the identification of critical dimensions in which transaction costs differ and an examination of the economizing properties of alternative institutional modes for organizing transactions. The crucial investment distinction is: To what degree are transaction-specific (non-marketable) expenses incurred? Unspecialized items pose few hazards, since buyers can turn toalternative sources, and suppliers can sell output intended for one order to other buyers. Non-marketability problems arise when specific parties' identities have important cost-bearing consequences. Transactions of this kind are labeled idiosyncratic. The summarized results of the review are as follows. First, firms' distribution decisions often prompt examination of the make-or-buy question: Should a marketing activity be performed within the organization by company employees or contracted to an external agent? Second, manufacturers introducing an industrial product to a foreign market face a difficult decision. Should the product be marketed primarily by captive agents (the company sales force and distribution division) or independent intermediaries (outside sales agents and distribution)? Third, the authors develop a theoretical extension to the basic transaction cost model by combining insights from various theories with the TCA approach. Fourth, other such extensions are likely required for the general model to be applied to different channel situations. It is naive to assume the basic model appliesacross markedly different channel contexts without modifications and extensions. Although this study contributes to scholastic research, it is limited by several factors. First, the theoretical perspective of TCA has attracted considerable recent interest in the area of marketing channels. The analysis aims to match the properties of efficient governance structures with the attributes of the transaction. Second, empirical evidence about TCA's basic propositions is sketchy. Apart from Anderson's (1985) study of the vertical integration of the selling function and John's (1984) study of opportunism by franchised dealers, virtually no marketing studies involving the constructs implicated in the analysis have been reported. We hope, therefore, that further research will clarify distinctions between the different aspects of specific assets. Another important line of future research is the integration of efficiency-oriented TCA with organizational approaches that emphasize specific assets' conceptual definition and industry structure. Finally, research of transaction costs, uncertainty, opportunism, and switching costs is critical to future study.

• Korean Journal of Construction Engineering and Management
• /
• v.16 no.2
• /
• pp.65-76
• /
• 2015

The Clean Development Mechanism (CDM) is the multi-lateral 'cap and trade' system endorsed by the Kyoto Protocol. CDM allows developed (Annex I) countries to buy CER credits from New and Renewable (NE) projects of non-Annex countries, to meet their carbon reduction requirements. This in effect subsidizes and promotes NE projects in developing countries, ultimately reducing global greenhouse gases (GHG). To be registered as a CDM project, the project must prove 'additionality,' which depends on numerous factors including the adopted technology, baseline methodology, emission reductions, and the project's internal rate of return. This makes it difficult to determine ex ante a project's acceptance as a CDM approved project, and entails sunk costs and even project cancellation to its project stakeholders. Focusing on hydro power projects and employing UNFCCC public data, this research developed a prediction model using logistic regression and CART to determine the likelihood of approval as a CDM project. The AUC for the logistic regression and CART model was 0.7674 and 0.7231 respectively, which proves the model's prediction accuracy. More importantly, results indicate that the emission reduction amount, MW per hour, investment/Emission as crucial variables, whereas the baseline methodology and technology types were insignificant. This demonstrates that at least for hydro power projects, the specific technology is not as important as the amount of emission reductions and relatively small scale projects and investment to carbon reduction ratios.

• KDI Journal of Economic Policy
• /
• v.13 no.4
• /
• pp.31-57
• /
• 1991

Korean firms of all sizes, from virtually every industry, have used and are using the term "excessive competition" to describe the state of their industry and to call for government interventions. Moreover, the Korean government has frequently responded to such calls in various ways favorable to the firms, such as controlling entry, curbing capacity investments, or allowing collusion. Despite such interventions' impact on the overall efficiency on the Korean economy as well as on the wealth distribution among diverse groups of economic agents, the term "excessive competition", the basis for the interventions, has so far escaped rigorous scrutiny. The objective of this paper is to clarify the notion of "excessive competition" and "over-investment" which usually accompanies "excessive competition", and to examine the circumstances under which they might occur. We first survey the cases where the terms are most widely used and proceed to examine those cases to determine if competition is indeed excessive, and if so, what causes "excessive competition". Our main concern deals with the case in which the firms must make investment decisions that involve large sunk costs while facing uncertain demand. In order to analyze this case, we developed a two period model of capacity precommitment and the ensuing competition. In the first period, oligopolistic firms make capacity investments that are irreversible. Demand is uncertain in period 1 and only the distribution is known. Thus, firms must make investment decisions under uncertainty. In the second period, demand is realized, and the firms compete with quantity under realized demand and capacity constraints. In the above setting, we find that there is "no over-investment," en ante, and there is "no excessive competition," ex post. As measured by the information available in period 1, expected return from investment of a firm is non-negative, overall industry capacity does not exceed the socially optimal level, and competition in the second period yields an outcome that gives each operating firm a non-negative second period profit. Thus, neither "excessive competition" nor "over-investment" is possible. This result will generally hold true if there is no externality and if the industry is not a natural monopoly. We also extend this result by examining a model in which the government is an active participant in the game with a well defined preference. Analysis of this model shows that over-investment arises if the government cannot credibly precommit itself to non-intervention when ex post idle capacity occurs, due to socio-political reasons. Firms invest in capacities that exceed socially optimal levels in this case because they correctly expect that the government will find it optimal for itself to intervene once over-investment and ensuing financial problems for the firms occur. Such planned over-investment and ensuing government intervention are the generic problems under the current system. These problems are expected to be repeated in many industries in years to come, causing a significant loss of welfare in the long run. As a remedy to this problem, we recommend a non-intervention policy by the government which creates and utilizes uncertainty. Based upon an argument which is essentially the same as that of Kreps and Wilson in the context of a chain-store game, we show that maintaining a consistent non-intervention policy will deter a planned over-investment by firms in the long run. We believe that the results obtained in this paper has a direct bearing on the public policies relating to many industries including the petrochemical industry that is currently in the center of heated debates.