• Journal of the Korea Institute of Information and Communication Engineering
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• v.19 no.8
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• pp.1893-1900
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• 2015

The government has the responsibility to prevent abuses of monopoly and promote competition in order to maximize consumer welfare. The government should address the asymmetry in the information as much as possible and ensure consumer choice. The subsidy seems to reduce the burden on the consumer service charges and handset prices but it actually distorts the market through price discrimination. The government caused the principal-agent problem by neglecting their appropriate role to prevent distortion of the mobile telecom market. The money used as subsidy is part of excess profit and could be transferred to down the price of mobile phone and charges and it would become a benefit to consumers. Separate announcement of subsidies by Mobile Communications Terminal Distribution Structure Improvement Act is a little developed policy but it was not actually realized. The market price close to that from perfect competition structure is plausible, ultimately.

• Journal of Distribution Science
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• v.15 no.11
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• pp.73-82
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• 2017

Purpose - This paper aims to investigate a profit maximizing incentive of foreign traders in distributing the KOSPI 200 Futures. Such an incentive may induce unsophisticated retail traders to suffer loss from speculative trading. Since Korean government increased the entry barriers of the market to protect unsophisticated traders, the market size has been decreasing while the proportion of the contract held by foreign traders has been increasing. These on going changes make the market imperfectly competitive, where a profit maximization incentives of foreign traders are expected to grow. In this paper, we attempt to find any evidence of such behavior, thereby providing implications regarding market policy and market efficiency. Research design, data, and methodology - According to Kyle(1985), an informed trader exploits his/her monopoly power optimally in a dynamic context so that he/she makes positive profit, where he/she could conceal his/her trading utilizing noise trading as camouflage. We apply the KOSPI 200 Futures market to the Kyle's model: foreign traders who take into account the effect of his/her trading to maximize expected profits as an informed trader, retail investors as noise traders, and financial institutions as market makers. To find any evidence of monopolistic behavior, we test the variants of trading volume and price data of the KOSPI 200 Futures over the period of 2009 and 2017. Results - First, we find that the price of the KOSPI 200 Futures are more volatile than the price of underlying asset. Second, we find that monopolistic foreign trader's trading order flows are consistent with exploiting his/her monopoly power to maximize profit. Finally, we find that retail investors' trading order flows are inversely consistent with maximizing profit, that is, uninformed retail investors suffer loss continuously in speculative trading against informed traders. Conclusions - Our results show that the quantity of strategic order flows may have a large effect on the price, therefore, resulting the market inefficiency. The results also imply that, in implementing regulations, the depth of the market must be considered to maintain market liquidity, and suggesting interesting research topics regarding the market structure.

• The Korean Journal of Financial Management
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• v.20 no.1
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• pp.1-27
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• 2003

The purpose of this study is to empirically investigate the role of capitalized intangibles such as patents, copy rights and R&D and non-capitalized intangibles such as advertising expenses and labor-related expenses, which are considered to be important to generating future excess profits, on the valuation of IPO shares. This study examines 125 firms which went public during 1992 - 1998. The result suggests that advertising expenses do not have significant influence on the offer price and the market price of IPO shares. On the other hand, R&D and labor-related expenses play important role in determining the offer price and the market price of IPO shares. In case of capitalized intangible assets, they we important factors in determining the market price but not the of for price. This study suspects that the Securities and Exchange Law of the Korean Securities Exchange Commission potentially contribute to the result of no effect of capitalized intangibles (except R&D) on the offer price by underwriters. According to the Law, any intangible assets which are considered to be irrelevant to the valuation of IPO shares must be exclued. This is very ambiguous and potentially cause underwriters to exclude any intangibles difficult to measure their value. However the market considers capitalized intangibles to be important, as suggested by the result of this study. To reduce this valuation asymmetry, it is important to reveal detailed information regarding the valuation of assets, in particular, intangible assets to the public.

• 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.

• Proceedings of the Korean Institute of Information and Commucation Sciences Conference
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• 2014.10a
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• pp.933-936
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• 2014

The government has the duty to prevent abuses of monopoly and promote competition in order to maximize consumer welfare. In order to promote competition we have to address the asymmetry in the information as possible and to ensure consumer choice. The subsidy seems to reduce the burden on the consumer service charges and handset prices but it virtually distort the market through price discrimination. The government caused the principal-agent problem by avoiding their appropriate role to prevent distortion of the mobile telecom market. The money used as subsidy could be transferred to down the price of cell phone and charges and it would be a benefit to consumers. Separate notice of subsidies by Mobile Communications Terminal Distribution Structure Improvement Act is a developed policy but it was too late. It, the market price close to that from perfect competition structure, is plausible, ultimately.

• Management Science and Financial Engineering
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• v.14 no.2
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• pp.105-118
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• 2008

There are many debates on the topic of the relationship between oil prices and economic growth. Through the repeated processes of conformations and contractions on the subject, two main issues are developed; one is how to define and drive oil shocks from oil prices, and the other is how to specify an econometric model to reflect the asymmetric relations between oil prices and output growth. The study, thus, introduces the unobserved component model to pick up the oil shocks and a first-order Markov switching model to reflect the asymmetric features. We finally employ unique oil shock variables from the stochastic trend components of oil prices and adapt four lags of the mean growth Markov Switching model. The results indicate that oil shocks exert more impact to recessionary state than expansionary state and the supply-side oil shocks are more persistent and significant than the demand-side shocks.

• The Korean Journal of Financial Studies
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• v.6 no.1
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• pp.289-312
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• 2000

This paper proposes a pricing model for IPOs which can reconcile the average underpricing phenomenon with the expected wealth maximizing behaviors of market participants. Under the usual informational asymmetry, the optimal offer price for best efforts IPOs is derived as a function of the uncertainty about market's valuation, the expected return on proposed projects and the size of offerings relative to the firm's market value. Depending on these firm-specific characteristics, best efforts IPOs can be underpriced, fairly priced, or overpriced. Introducing the investment banker as an outside information producer, the model is extended to provide empirical implications for pricing and underwriting contract choice decisions which are consistent with the existing empirical evidences. The model predicts that the issuers with greater uncertainty about market's valuation choose best efforts contract over firm commitment contract and the dispersion of initial returns would be greater for best efforts IPOs than for firm commitment IPOs.

• Communications for Statistical Applications and Methods
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• v.21 no.5
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• pp.445-459
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• 2014

This paper investigates the dependence structure of Korean financial markets (stock, foreign exchange (FX) rates and bond) using copula-GARCH and dynamic conditional correlation (DCC) models. We examine GJR-GARCH with skewed elliptical distributions and four copulas (Gaussian, Student's t, Clayton and Gumbel) to model dependence among returns, and then employ DCC model to describe system-wide correlation dynamics. We analyze the daily returns of KOSPI, FX (WON/USD) and KRX bond index (Gross Price Index) from $2^{nd}$ May 2006 to $30^{th}$ June 2014 with 2,063 observations. Empirical result shows that there is significant asymmetry and fat-tail of individual return, and strong tail-dependence among returns, especially between KOSPI and FX returns, during the 2008 Global Financial Crisis period. Focused only on recent 30 months, we find that the correlation between stock and bond markets shows dramatic increase, and system-wide correlation wanders around zero, which possibly indicates market tranquility from a systemic perspective.

• ETRI Journal
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• v.32 no.3
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• pp.447-456
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• 2010

Asymmetric regulation as applied to mobile termination rates refers to regulatory arrangements in which different mobile operators charge different termination rates, even though the services provided are essentially identical. The asymmetric regulation has been frequently used as a regulatory tool to support new entrants to a mobile market. This paper examines the economic effects of asymmetric regulation of mobile termination rates using a theoretical model and its simulation. The result shows that when there is no noticeable difference in brand loyalty between mobile operators with the high degree of substitutability between services provided by mobile operators, and the costs of new entrants are low, a reduction in the asymmetry of mobile access prices results in an enhancement of consumer welfare. These findings provide positive evidence for the argument that in certain situations asymmetric pricing of mobile access services may be counterproductive for consumer welfare.

• Journal of the Society of Naval Architects of Korea
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• v.50 no.3
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• pp.145-152
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• 2013

Recently, with oil price jumping and environmental issues, Green ship is paid deep attention to by ship owner, operator, builder, class and government. Fuel efficiency and reduction of $CO_2$ emissions are expected to have a strong influence on the design and operation of merchant ships. Many ship owners and operators are seeking the more economic method by the best operating route and the application of reliable and effective energy saving devices. With the Energy Efficiency Design Index (EEDI) in 2013 attention will more than ever be focused at achieving maximum fuel economy in the hydrodynamic design of hull forms, their appendages and propellers. IMO requirements for $CO_2$ emission for ships will now be implemented for vessels ordered from 1st January 2013. So far, a lot of new idea and patents have been proposed, tested, claimed and applied for various kinds of ship type. This paper shows numerical and experimental work related to a study on a energy saving devices particularly for fuller ship such as merchant vessel of Tanker and Bulker. From the bare hull wake measurements, typical upper/lower asymmetry of hull wake at the propeller disk was found. The pre-swirl duct have been designed and reviewed to recover the loss of propeller running in that condition. The general function of the pre-swirl duct was set to work against this asymmetry of wake and generate pre-swirled flow into the propeller against the propeller rotating direction.