Fixed-to-mobile call substitution and telephony market definition in Korea

An appropriate market definition is critical in most antitrust cases. In practice, antitrust authorities define economic markets in a deterministic manner with little concern about the risk involved in defining markets incorrectly. In contrast, this article proposes a probabilistic market definition method by which antitrust authorities can establish a statistical confidence level for their intended market-definition judgments. As an application, we examine the likelihood that the fixed-line and mobile telephony services in Korea can compete in the same economic market. Combining critical loss analysis with a hierarchical Bayes model for stated preference data, we find some evidence for the separation of the fixed-line and mobile telephony markets in present-day Korea. After discussing certain possible regulation biases for market definition, we predict that the two markets will converge in the near future as the mobile price premium continues to decrease.     

Time-Series Support for Balassa's Productivity-Bias Hypothesis: Evidence from Korea

In this paper we use the Johansen and Juselius cointegration technique and quarterly data over the period 1979–1993 to test the productivity-bias hypothesis between Korea and four of its major trading partners (Germany, Japan, the United Kingdom, and the United States). The results show that in all four cases the deviation of purchasing-power parity (PPP) from the equilibrium exchange rate has a long-run relationship with the productivity ratios, supporting the notion that as Korea becomes relatively more productive, the Korean won appreciates in real terms.     

How does the call market method affect price efficiency? Evidence from the Singapore Stock Market

On August 21, 2000, the Singapore Exchange (SGX) adopted the call market method to open and close the market while the remainder of the day’s trading continued to rely on the continuous auction method. The call method significantly improved the price discovery process and market quality. A positive spillover effect is observed from the opening and closing calls. Day-end price manipulation also declined after the introduction of the call market method. However, the beneficial impact from the call market method is asymmetric, benefiting liquid stocks more than illiquid stocks.     

Investment in salvage equipment

Manufacturers are faced with three options for disposing of excess finished items: they can (1) continue to mark down the item until it sells; (2) dispose of or scrap it; or (3) salvage it in order to reclaim valuable raw materials and components. In many situations the option of a markdown is not viable, thus the choice is to either scrap or salvage. Although many manufacturers have invested in salvage equipment, they have not deduced the impact of this investment as it affects not only the risk-adjusted value of the project but also the production run size and the selling price. Hence, their decisions frequently turn out to be suboptimal. This paper develops a project-valuation model that adds a new dimension to traditional capital budgeting decisions by incorporating salvage capacity.     

Asymmetric Effects of Money on Inflation: Evidence from Korean Data

New Keynesian macroeconomic models predict that monetary shocks have asymmetric effects on inflation, i.e., inflation responds more to positive monetary shocks than to negative shocks (Asymmetry Hypothesis A), and that the asymmetry is positively associated with movements in average inflation (Asymmetry Hypothesis B). Korean data are shown to provide little support for Asymmetry Hypothesis A and strong support for Asymmetry Hypothesis B. [O53, E12]     

Interaction effects of formal and social controls on business-to-business performance

Marketing and Strategy studies have treated relational governance as a critical factor of business-to-business (B2B) performance. Extant studies offer contrasting views on whether formal or social control is a better control mechanism, with little known about their interaction effect. In this study, the authors aim to investigate the interaction effect of these two control mechanisms by dividing a B2B contract (formal control) into two provisions (transactional and relational) and to examine the specific interaction effect of social control on each provision. The authors also seek to investigate the moderating effects of environmental dynamism, prior ties, and buyer lock-in. The measure of B2B performance reflects relational quality and financial outcome. The results show significantly different interactions between each provision of the contract and social control depending on the level of environmental dynamism and buyer lock-in, and suggest that the environmental condition of the transactions is reflective of managers' optimal control mechanisms.     

Targeting Rules for an Open Economy

This study extends the formal analysis of inflation targeting monetary policy using the standard New Keynesian framework to a small open economy by adding inflation and output persistence as well as a direct exchange rate channel to domestic inflation. We find that output variability is lower under CPI inflation targeting than under domestic inflation targeting. However, CPI inflation results in higher variability of the real exchange rate than domestic inflation targeting. Output and the nominal interest rate are less volatile under flexible inflation targeting than under almost-strict inflation targeting. We also find that almost-strict domestic inflation targeting cannot completely insulate domestic inflation from foreign shocks due to a direct exchange rate channel. The model is calibrated to Canadian data.