• KDI Journal of Economic Policy
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• v.12 no.1
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• pp.127-148
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• 1990

A Milgrom-Roberts style signalling model of limit pricing is developed to analyze the possibility and the scope of limit pricing in general, noncooperative oligopolies. The model contains multiple incumbent firms facing a potential entrant and assumes an information asymmetry between incombents and the potential entrant about the market demand. There are two periods in the model. In period 1, n incumbent firms simultaneously and noncooperatively choose quantities. At the end of period 1, the potential entrant observes the market price and makes an entry decision. In period 2, depending on the entry decision of the entrant, n' or (n+1) firms choose quantities again before the game terminates. Since the choice of incumbent firms in period 1 depends on their information about demand, the market price in period 1 conveys information about the market demand. Thus, there is a systematic link between the market price and the profitability of entry. Using Bayes-Nash equilibrium as the solution concept, we find that there exist some demand conditions under which incumbent firms will limit price. In symmetric equilibria, incumbent firms each produce an output that is greater than the Cournot output and induce a price that is below the Cournot price. In doing so, each incumbent firm refrains from maximizing short-run profit and supplies a public good that is entry deterrence. The reason that entry is deterred by such a reduced price is that it conveys information about the demand of the industry that is unfavorable to the entrant. This establishes the possibility of limit pricing by noncooperative oligopolists in a setting that is fully rational, and also generalizes the result of Milgrom and Roberts to general oligopolies, confirming Bain's intuition. Limit pricing by incumbents explained above can be interpreted as a form of credible collusion in which each firm voluntarily deviates from myopic optimization in order to deter entry using their superior information. This type of implicit collusion differs from Folk-theorem type collusions in many ways and suggests that a collusion can be a credible one even in finite games as long as there is information asymmetry. Another important result is that as the number of incumbent firms approaches infinity, or as the industry approaches a competitive one, the probability that limit pricing occurs converges to zero and the probability of entry converges to that under complete information. This limit result confirms the intuition that as the number of agents sharing the same private information increases, the value of the private information decreases, and the probability that the information gets revealed increases. This limit result also supports the conventional belief that there is no entry problem in a competitive market. Considering the fact that limit pricing is generally believed to occur at an early stage of an industry and the fact that many industries in Korea are oligopolies in their infant stages, the theoretical results of this paper suggest that we should pay attention to the possibility of implicit collusion by incumbent firms aimed at deterring new entry using superior information. The long-term loss to the Korean economy from limit pricing can be very large if the industry in question is a part of the world market and the domestic potential entrant whose entry is deterred could .have developed into a competitor in the world market. In this case, the long-term loss to the Korean economy should include the lost opportunity in the world market in addition to the domestic long-run welfare loss.

• KDI Journal of Economic Policy
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• v.12 no.4
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• pp.47-69
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• 1990

Using an aggregator model, we look into the possibilities for substitution between Korea's exports, imports, domestic sales and domestic inputs (particularly labor), and substitution between disaggregated export and import components. Our approach heavily draws on an economy-wide GNP function that is similar to Samuelson's, modeling trade functions as derived from an integrated production system. Under the condition of homotheticity and weak separability, the GNP function would facilitate consistent aggregation that retains certain properties of the production structure. It would also be useful for a two-stage optimization process that enables us to obtain not only the net output price elasticities of the first-level aggregator functions, but also those of the second-level individual components of exports and imports. For the implementation of the model, we apply the Symmetric Generalized McFadden (SGM) function developed by Diewert and Wales to both stages of estimation. The first stage of the estimation procedure is to estimate the unit quantity equations of the second-level exports and imports that comprise four components each. The parameter estimates obtained in the first stage are utilized in the derivation of instrumental variables for the aggregate export and import prices being employed in the upper model. In the second stage, the net output supply equations derived from the GNP function are used in the estimation of the price elasticities of the first-level variables: exports, imports, domestic sales and labor. With these estimates in hand, we can come up with various elasticities of both the net output supply functions and the individual components of exports and imports. At the aggregate level (first-level), exports appear to be substitutable with domestic sales, while labor is complementary with imports. An increase in the price of exports would reduce the amount of the domestic sales supply, and a decrease in the wage rate would boost the demand for imports. On the other hand, labor and imports are complementary with exports and domestic sales in the input-output structure. At the disaggregate level (second-level), the price elasticities of the export and import components obtained indicate that both substitution and complement possibilities exist between them. Although these elasticities are interesting in their own right, they would be more usefully applied as inputs to the computational general equilibrium model.

• Environmental and Resource Economics Review
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• v.26 no.2
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• pp.257-286
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• 2017

This paper estimates the effects of imaginary repeated increases in excise duties on fuel oil consumption and on their income redistribution according to changes in consumer price index, if the inflation indexation system was introduced right after the second Energy Tax Reform ended in July, 2007 in Korea. In fact, nominal excise rates have not been adjusted since 2007. As a result, the real excise rates on fuel oils have been diminished inversely proportional to the consumer price index. Own- and cross-price elasticities of fuel oils such as gasoline and diesel oil are estimated under the general equilibrium framework based on the linear expenditure system. Counterfactual analyses through microsimulation in a static model are adopted to estimate the effects of introducing inflation indexation into the fuel tax in 2007 when the second Energy Tax reform ended on the fuel consumption and income redistribution in 2014. Microsimulations suggest that its introduction could have reduced the consumption of gasoline and diesel oil by 8.8% and 5.4%, respectively, ending up with increased excise revenue by 11.9%. The revenue increase in spite of decreased consumption is mainly because their demands are price inelastic. It could also have increased positive income redistributive effect by 0.01%p (from 0.12% to 0.13%), which is measured in terms of percentage decrease in Gini coefficient. In other words, the fuel excise on the two fuel oils decreased by 0.13% the Gini coefficient of before and after fuel tax income in 2014. This implies that the inflation indexation could have enlarged the income redistributive effect up to 0.13% in 2014, if it is introduced in 2007.

• Journal of Intelligence and Information Systems
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• v.23 no.1
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• pp.69-93
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• 2017

The development of ICT has leaded the diversification and changes of supplies and demands in markets. It also caused the creations of a variety of values which are differentiated from those in the existing market. Therefore, a new-type market is created, which can include multi-value chains which are from ICT-based created markets as well as the existing markets. We defined the platform as the new-type market. In the platform, the multi-value chains can be coexisted with multi-values. In true market, when a new-type value chain entered into an existing market, it is general that it can be conflicted with the existing value chain in the market. The conflicted problem among multi-value chains in a market is caused by the sharing of limited market resources like suppliers, consumers, services or products among the value chains. In other words, if there are multi-value chains in the platform, then it is possible to have conflictions, overlapping, creations or losses of values among the value chains. To solve the problem, we introduce coexistence factors to reduce the conflictions to reach market equilibrium in the platform. In the other hand, it is possible to lead the creations of differentiated values from the existing market and to augment the total market values in the platform. In the early era of ICT development, ICT was introduced for improvement of efficiency and effectiveness of the value chains in the existing market. However, according to the changed role of ICT from the supporter to the promotor of the market, ICT became to lead the variations of the value chains and creations of various values in the markets. For instance, Uber Taxi created a new value chain with ICT-based new-type service or products with new resources like new suppliers and consumers. When Uber and Traditional Taxi services are playing at the same time in Taxi service platform, it is possible to create values or make conflictions among values between the new and old value chains. In this research, like Uber and traditional taxi services, if there are conflictions among the multi-value chains, then it is necessary to minimize the conflictions in the platform for the coexistence of multi-value chains which can create the value-added values in the platform. So, it is important to predict and discuss the possible conflicted problems between new and old value chains. The confliction should be solved to reach market equilibrium with multi-value chains in the platform. That is, we discuss the possibility of the coexistence of multi-value chains in the platform which are comprised of a variety of suppliers and customers. To do this, especially we are focusing on the healthcare markets. Nowadays healthcare markets are popularized in global market as well as domestic. Therefore, there are a lot of and a variety of healthcare services like Traditional-, Tele-, or Intelligent- healthcare services and so on. It shows that there are multi-suppliers, -consumers and -services as components of each different value chain in the same platform. The platform can be shared by different values that are created or overlapped by confliction and loss of values in the value chains. In this research, as was said, we focused on the healthcare services to show if a platform can be shared by different value chains like traditional-, tele-healthcare and intelligent-healthcare services and products. Additionally, we try to show if it is possible to increase the value of each value chain as well as the total value of the platform. As the result, it is possible to increase of each value of each value chain as well as the total value in the platform. Finally, we propose a coexistence model to overcome such problems and showed the possibility of coexistence between the value chains through experimentation.

• Journal of Radiation Protection and Research
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• v.10 no.1
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• pp.50-63
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• 1985

A derivation of new release limit, named Derived Release Limit(DRL), into the atomsphere from a reference nuclear power plant has been performed on the basis of the new system of dose limitation recommended by the ICRP, instead of the (MPC)a limit which has been currently used until now as a general standard for radioactive effluents in Korea. In DRL Calculation, a Concentration Factor Method was applied, in which the concentrations of long-term routinely released radionuclides were in equilibrium with dose in environment under the steady state condition. The analytical model used in the exposure pathway analysis was the one which has been suggested by the USNRC and the exposure limits applied in this analysis were those recommended by the USEPA lately. In the exposure pathway analysis, all of the pathways are not considered and some may be excluded either because they are not applicable or their contribution to the exposure is insignificant compared with other pathways. In case, the environmental model developed in this study was applied to the Kori nuclear power plant as the reference power plant, the highest DRL value was calculated to be as $9.10{\times}10^6Ci/yr$ for Kr-85 in external whole body exposure from the semi-infinite radioactive cloud, while the lowest DRL value was observed 3.64Ci/yr for Co-60 in external whole body exposure from the contaminated ground, by the radioactive particulates. The most critical exposure pathway to an individual in the unrestricted area of interest (Kilchun-Ri, 1.3 km to the north of the release point) seems to be the exposure pathway from the contaminated ground and the most critical radionuclide in all pathways appears to be Co-60 in the same pathway. When comparing the actual release rate from KNU-l in 1982 with the DRL's obtained here the release of radionuclides from KNU-1 were much lower than the DRL's and it could be conclued that the exposure to an individual had been kept below the exposure limits recommended by the USEPA.

• KDI Journal of Economic Policy
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• v.12 no.3
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• pp.153-172
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• 1990

The present paper investigates the potential value of strategic antitrust policy in an oligopolistic international market. The market is characterized by a non-cooperative Cournot-Nash equilibrium and by asymmetry in costs among firms in the world market. The model is useful for two reasons. First, it is important in the context of policy-making to examine the conditions under which it may be beneficial to relax antitrust law to enhance competitiveness. Second, the explicit derivation of the level of cost-saving required for a gain in total domestic surplus provides an empirical rule for excluding industries that do not satisfy the requirements for a socially beneficial antitrust exemption. Results of the analysis include a criterion that tells how the cost-saving and concentration effects of a merger offset each other. The criterion is derived from fairly general assumptions on demand functions and is simple enough to be applied as a part of the merger guidelines. Another interesting policy implication of our analysis is that promoting mergers would not be a beneficial strategy in a net importing industry where cost-saving opportunities are thin. Cost-saving domestic mergers are more likely to increase national welfare in exporting industries. The best candidate industries for application of strategic antitrust policy are those with the following characteristics: (i) a large potential for efficiency enhancement; (ii) high market concentration at the world but not the domestic level; (iii) a high ratio of exports to imports. Recently, many policymakers and economists in Korea have also come to believe that the appropriate antitrust policy in an era of increased foreign competition may actually be to encourage rather than to prohibit domestic mergers. The Industry Development Act of 1986 and the proposed bill for Mergers and Conversions in the Financial Industry of 1990 reflect this changing perspective on antitrust policy. Antitrust laws may burden domestic firms in the sense that they have a more constrained strategy set. Expenditures to avoid antitrust attacks could also increase costs for domestic firms. But there is no clear evidence that the impact of antitrust policy is significant enough to harm the competitiveness of domestic firms. As a matter of fact, it is necessary for domestic financial institutions to become large in scale in this era of globalization. However, the absence of empirical evidence for efficiency enhancement from mergers suggests caution in the relaxation of antitrust standards.