• The Journal of Asian Finance, Economics and Business
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• v.6 no.4
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• pp.179-187
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• 2019

This study aims to investigate the effects of market commonality and resource similarity on price competition and the recursive consequences in the Korean lodging market. Price comparison among hotels in the same geographic market has been facilitated through the development of information technology, rendering little search cost of consumers. While the literature implies the heterogeneous price attack and response among hotels, a limited number of empirical researches focus on the asymmetric and recursive pattern in the competitive dynamics. This study empirically examines the price interactions in the Korean lodging market based on the theoretical framework of competitive price interactions and countervailing power. Demonstrating superiority to the spatial lag model and the ordinary least squares in the estimation, the results from spatial error model suggest that the hotels with longer operational history pose an asymmetric impact on the price of the newer hotels. The asymmetry is also found in chain hotels over the independent, further implying the possibility of predatory pricing. The findings of this study provide the evidence of a hierarchical structure in the price competition, with different countervailing power by the resources of the hotels. Theoretical and managerial implications are discussed, with suggestions for future study.

• Journal of Distribution Science
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• v.14 no.6
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• pp.39-44
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• 2016

Purpose - This paper aims to study the competition that occurs in the Islamic Banking industry and to analyze the variables that affect the total revenue of Islamic Banking in Indonesia. Research Design, Data and Methodology - This study observed 10Islamic banks for the period 2010-2013. The annual data are taken from Direktori Perbankan Indonesia, published by Bank Indonesia, and annual report of the observed banks. In analyzing data, Panzar Rosse Approach was applied to analyze the type of Islamic Bank Market and Panel Regression Model for the estimated co-efficients has been used in the Panzar Rosse Approach. Results - Estimation model shows that all the banking cost elements such as the price of capital, unit price of labor, and unit prices of funds have significant positive correlation to Revenue as a dependent variable. The estimated value of H-statistic for the period 2010-2013 is 0.69. It can be interpreted that Islamic banking market in Indonesia shows monopolistic competition. Price of capital and funds has statistically significant effect on Bank's Revenue. Conclusions - The study revealed that the Islamic banking market competition in Indonesia is monopolistic and the major contribution to the H-statistic comes from mainly price of funds.

• Korean Management Science Review
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• v.32 no.1
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• pp.83-100
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• 2015

We analyze a duopoly competition when two firms face input cost increases. The objective of this study is to determine the firms' optimal strategy between a price increase and downsizing under conditions of a spatially differentiated market and consumers' diminishing utility on the product size. We develop a theoretical model of two competing firms offering homogenous products using the standard Hotelling model to determine how firms' optimal strategies change when facing input cost increases. In this paper, there are two types of duopoly competitions: symmetric and asymmetric. In the symmetric case, the two firms have the same marginal cost and are producing and selling identical products. In the asymmetric case, the two firms have different marginal costs. The results show that the optimal strategy decision depends on the size of the input cost increase and the cost differences between the two firms. We find that when two firms are asymmetric (i.e., they have different marginal costs), the two firms might choose asymmetric pairs of strategies in equilibrium under certain conditions. When the cost differences between the two firms are sufficiently large and the cost increase is sufficiently small, the cost leader chooses price increase, and the cost-disadvantaged firm chooses downsizing in equilibrium. This asymmetric strategy reduces price competition between two firms, and consumers are better off. When the cost differences between the two firms are sufficiently large, downsizing is the dominant strategy for the cost-disadvantaged firm. The cost-disadvantaged firm finds it more profitable to reduce the product size than to increase its price to reduce price competition, because consumers prefer downsizing to price increases. This paper might be a good starting point for further analytical research in this area.

• Proceedings of the KIEE Conference
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• 2000.07a
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• pp.376-378
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• 2000

The current worldwide electricity market introduced competition, which is breaking up the monopoly structure and also enforcing phased structural reform in South Korea. The change of the electricity charge from cost base to price base due to the introduction of the electricity market competition causes consumer to choose a variety of charge schemes and a portion of loads to be affected by this change. Therefore, in order to find a mathematical model of the sensitively-responding-to-price loads and reflect this to the DSM demand management, the price-sensitive load model is needed. Thus, this paper first proposes the composite price-sensitive load model that is expressed as a function of price, presents the methodology to estimate price-sensitive load model at each bus by bus load compositions.

• The Transactions of the Korean Institute of Electrical Engineers A
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• v.51 no.6
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• pp.269-275
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• 2002

Recently, Korea's electric industry has experienced substantial changes in its structure and function including the introduction of competition in the generation sector. Korea is in the early stages of market competition where the market price is determined by generation costs. In the future, the market Price will be determined by generators'bids. Therefore, the generators'profit is determined by market pool price, the prospects of pool price are very important for new capacity investment decision made by generators and IPPS. This study analyzes hourly marginal costs and LOLP considering basic generation mix and characteristics develops the relationship of pool price and Profit by generation-type using the change in reserve margin, and proposes basic direction for profits variation and supply-demand analysis in the electricity market in future.

• The Journal of Fisheries Business Administration
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• v.40 no.1
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• pp.27-49
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• 2009

Recently, the Korea's economy concerns the second money crisis because of the rapid increase of the exchange rate. The Korea's economy which is very dependent on the foreign trade is more sensitive to the change of exchange rates. There are many literatures which analyze the effects of variations of the exchange rates on the secondary and tertiary industries such as the manufacturing industry and IT(Information Technology). But there have been no studies which try to figure out the effects of variations of exchange rate on the primary industries, especially, fisheries' industry. Therefore this paper tries to analyze the effect of price competition structure and the change of exchange rate on foreign fisheries exporting prices in Korea's fisheries import market. This study utilizes OLS(Ordinary Least Squares Analysis) for the analysis in the market of frozen yellow corvina, hairtail, angler fish which are major fisheries importable in Korea. The results show that the exporting country which has the highest market share is more sensitive to the change of the exchange rates itself than that of the other exporting countries' price when it starts to set up its exporting price. And the exporting countries which have low market share are more sensitive to the change of price which country has the highest market share than that of price whose countries have low market share and those of their exchange rate. Also we can find out that the countries which have similar market share try to set up price-setting strategy in the opposite direction. In other words, one country tries to bid up its price, other countries response to rival country by lowering their prices. In the consideration of the fact that most exporting countries aren't affected by Korea's fisheries' prices, the exporting countries in Korea's fisheries import market are more sensitive to the prices of other exporting countries than that of Korea's. This result indicates that the price leader-follower model could be applicable to the Korea's fisheries import market.

• The Journal of the Korea Contents Association
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• v.19 no.4
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• pp.79-90
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• 2019

As an increasing number of cloud service providers begin to provide cloud computing services, they form a competitive market to compete for users. Due to different resource configurations and service workloads, users may observe different response times for their service requests and experience different levels of service quality. To compete for cloud users, it is crucial for each cloud service provider to determine an optimal price that best corresponds to their service qualities while also guaranteeing maximum profit. To achieve this goal, the underlying rationale and characteristics in this competitive market must be clarified. In this paper, we analyze price competition in the multimedia cloud service market with two service providers. We characterize the nature of non-cooperative games in a duopoly multimedia cloud service market with the goal of capturing how each cloud service provider determines its optimal price to compete with the other and maximize its own profit. To do this, we introduce a queueing model to characterize the service process in a multimedia cloud data center. Based on performance measures of the proposed queueing model, we suggest a price competition problem in a duopoly multimedia cloud service market. By solving this problem, we can obtain the optimal equilibrium prices.

• Environmental and Resource Economics Review
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• v.19 no.1
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• pp.3-21
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• 2010

By the significant structural change in 1999, a partial privatization has occurred in Korean fossil-fuel power generation sector. Under the current price scheme wholesale electricity price is dependent on output size, and hence, may not satisfy the assumption of price-taking producers. The purpose of our study is constructing the productivity change measurements of Korean power generation sector taking into account possibly imperfect competition and variable returns to scale. Our approach based on Harrison (1994) and Levinsohn (1993) derives the plant-level productivity measurements of the period between 2001 and 2007, as well as the measurements of mark-ups and returns to scale. It is shown that the mark-up size is dependent on the plants' fuel type and is decreasing over time. Allowing for imperfect competition and variable returns to scale adjusts the productivity measurements substantially.

• Korean Management Science Review
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• v.33 no.4
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• pp.65-75
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• 2016

We study limit pricing in a price-based duopoly market under asymmetric information on the demand state. An incumbent, who is a monopolist in the initial period, has complete information on the size of a market, while a potential entrant only knows it partially. After observing the sales price of the incumbent in the first period, the entrant decides whether to enter a duopoly market and the sales price if she chooses to. We present a separating perfect Bayesian equilibrium, which indicates that limit pricing can deter the entry of a potential entrant under price competition when there is information asymmetry about the demand state.

• KDI Journal of Economic Policy
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• v.43 no.3
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• pp.55-77
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• 2021

In Korea, local governments and local agencies had to apply a version of the first price auction augmented by an ex-post screening process when they procure construction contracts. However, this first price auction had been criticized because it was felt that too much price competition could lead to poor ex-post performance in construction. In response, the existing auction method was recently replaced by a version of the average price auction with a similar screening process. This paper empirically examines the effectiveness of this reform and finds that the replacement only increases the fiscal burden of local governmental bodies without making any improvement in the ex-post performance.