Membership amidst Lack of Confidence : A Game-Theoretic Case of British Membership in the EEC

Ahn, Sukwhan 한국EU학회 2000 EU학연구 Vol.5 No.2

This paper establishes how a potential member state comes to join a supranational entity in a setting where the former appears to have conflicts with the latter. Unless a state seeking a membership in an entity is convinced that the entity is absolutely unwilling to accommodate the state, the former finds it advantageous to be participatory because such a choice will be responded by an entity's accommodating move. To be specific, if a state leaves possibilities open to the event that an entity is generous, both players will Iikely form a friendly relationship: that is, an entity makes a generous play and a state considering joining an entity acts in a participatory manner. They, in fact, make a strategic use of a state's lack of confidence for a mutually beneficial purpose: A nonexpansionary entity gains by acting generous as long as a membership-seeking state, who updates beliefs in the Bayesian manner, is not convinced for sure of the entity's characteristic. The sequential equilibrium of this bounded rationality model is unique, and as such a state without confidence in an entity's generosity can still be expected to participate in the entity. This sheds an elucidating light on the British membership in the EEC.

Are Multinational Enterprises Justified on Welfare Grounds? : A Symmetric Case

Ahn, Sukwhan,Kang, InSoo,Shin, Hyukseung 淑明女子大學校 經濟經營硏究所 1996 經濟經營論集 Vol.26 No.-

This paper examines the economic rationales conditions for the emergence of multinational enterprises (MNEs) for the symmetric case. Enhancing production efficiency is not sufficient to justify MNEs because their emergence implies a change in market structure towards a less competitive one. With taxes in the model, the welfare consequence of MNE becomes more complicated. Whether or not an MNEs becomes harder to justify on welfare grounds critically depends on the public good nature of the MNE and its demand and ownership structures. (JEL : F23, D43, H21)

The internal and external effect of strategic subcoalition : research joint venture vs. R&D cartel

Ahn, Sukwhan,Shin, Hyukseung,Kang, InSoo 淑明女子大學校 經濟經營硏究所 1996 經濟經營論集 Vol.26 No.-

This paper examines the effect of subcoalition in R&D on R&D investment, consumer surplus and producer surplus compared to the industry-wide coalition. The main result of this paper is as follows. First, when spillover rate is in a medium range, the R&D cartel lowers social welfare relative to R&D competition, while welfare rises by R&D cartel when spillover rate is high or low enough. Second, for the subcoalition case, the producer surplus under RJV competition can be higher than that under RJV cartel for low spillover rate contrary to the case of industry-wide coalition. third, for the subcoalition case, an RJV competition can be better than R&D cartel in terms of consumer welfare for low spillover rate, which never happens for the industry-wide coalition case. Fourth, for the subcoalition case, consumer surplus under an RJV competition can be greater than that under R&D competition case for low spillover rate contrary to the industry-wide coalition.

A Simple Note on Financial Flexibility

Ahn, Sukwhan 숙명여자대학교 경제경영연구소 2006 經濟經營論集 Vol.36 No.1

This paper examines the fundamental structure of financial flexibility. Financial flexibility exhibits beneficial characteristics when some economic agents are risk-averse because smoothing creates economic value that can be shared by all parties involved. The theoretical findings made in this study lend themselves to elucidating many financial practices frequently debated on such as choice of pension funding mode and capital structure, debt rescheduling and the Japanese main bank system

International Market Structuring with a Multinational Enterprise

Ahn, Sukwhan,Kang, In Soo,Shin, Hyukseung 세종대학교 국제경제연구소 1997 Journal of Economic Integration Vol.12 No.2

This paper examines the economic rationales and conditions for the emergence of multinational enterprises (MNEs). Promoting production efficiency is not sufficient to justify the emergence of an MNE. With taxes in the model, tax authorities heavily tax an MNE's economic activities, in which case an MNE becomes harder to justify on welfare grounds. This arises from the public good nature of MNEs and suggests a tax policy coordination to foster welfare improvement through the emergence of MNEs.(JEL:F23, D43, H21)

Progressive Income Taxation and Minimum Wage : Can They Correct Market Failure?

Ahn, Sukwhan 한국경영컨설팅학회 2013 경영컨설팅연구 Vol.13 No.2

This study explores the compensation structures of labor contracts that are offered by firms hiring workers with private information. Workers can be self-selected at equilibrium by performance-based compensation in addition to performance-invariant compensation (called "wage"). Labor market may not play its role of placing labor force to firms as Pareto efficient equilibrium contracts fail to exist due to information asymmetry. In case of market failure, wage floor (such as minimum wage law) becomes an institutional remedy that restores an equilibrium in the market. Alternatively, a progressive income tax policy can be employed to rectify the market failure. It is markedly interesting to find that measures that are usually thought of as promoting equity also contribute to rectification of market failure. It is entirely encouraging to make this case in the sense that equity-enhancing measures could go together with efficiency.

How Can Pensions Be Contracted upon Benefits?: A Coasian Exploration

Ahn, Sukwhan,Kim, ChongMin THE KOREAN ECONOMIC SOCIETY 1998 JOURNAL OF ECONOMIC THEORY AND ECONOMETRICS Vol.4 No.1

One of the most well-known characteristics of defined benefit pension plans is that they allow a greater financial flexibility to shareholders of the sponsoring firm than defined contribution pension plans. By jeopardizing the retirees' income security, however, this feature of defined benefit pension plans may well run counter to the very spirit pensions are meant to foster. From the viewpoint suggested by Coase(1937, 1960), this paper examines this nature of defined benefit plans and suggests an institution with which they can earn realistic substance. That is, this paper elucidates the role of the ERISA and the PBGC in mitigating the incompleteness of property rights and the severity of transaction costs in the defined benefit system. These institutional arrangements provide an economic rationale for defined benefit plans as a pension system preferred by both shareholders and employees.

How can Pensions Be Contracted upon Benefit?:A Coasian Exploration

Sukwhan Ahn,Chongmin Kim 한국계량경제학회 1998 JOURNAL OF ECONOMIC THEORY AND ECONOMETRICS Vol.4 No.1

Effect of Demand for Labor On Investment in Education

Sukwhan Ahn 대한산업경영학회 2021 산업융합연구 Vol.19 No.6

본 연구의 목적은 노동에 대한 수요가 구직자의 교육에 대한 결정에 어떤 영향을 미치는가를 분석함에 있다. 혁신과 기술진보가 노동에 대한 수요를 줄이고 노동시장의 불확실성을 증대시키는 상황에서 본 연구는 노동자의 교육에 대한 투자가 노동에 대한 수요에 어떻게 의존하는가를 판단하는데 도움이 되는 이론적 구조를 제공하고자 한다. 본 연구의 결과는 다음과 같다. 첫째, 노동에 대한 수요가 감소할수록 교육에 대한 수요는 일반적으로 증가한 다. 하지만 이런 결과는 반드시 성립하는 것은 아니다. 둘째, 감소하는 노동에 대한 수요에 대하여 노동자가 교육에 대한 수요를 증가시키는 것은 노동자의 (애로우-프랏 절대위험기피계수로 측정한) 위험기피도가 어떤 수준을 상회 하는 경우에만 성립한다. 셋째, 노동에 대한 수요가 감소하더라도 노동자에 대한 보수가 그의 교육에 대한 투자를 반영하지 않는 경우, 노동자는 오히려 교육에 대한 투자를 줄인다. The purpose of this paper is to examine how demand for labor affects the job seeker's decision on the level of investment in education. In the current paradigm of economic growth in which innovations and technological developments generally weaken the strength demand for labor and increases the uncertainty related to employment, this paper provides a theoretical framework that can be used as a basic framework in understanding the decision of investment in education in varying conditions of demand for labor. The following are the findings of this paper. First, the level of investment in education can generally be regarded to be higher as the demand for labor exacerbates but for the job seekers with a certain characteristic. Second, the Arrow-Pratt absolute risk-aversion measure is the characteristic of the job seeker that determines in what direction the job seeker changes in the level of investment in education, For an arbitrary level of demand for labor there exists a certain threshold which determines the minimum degree of risk-aversion required for the job seeker’s Arrow-Pratt should go over to increase the level of education as demand for labor weakens. Third, the job seekers lower the level of education even though the demand condition in labor markets weakens if the compensation function does not depend on the level of education. This is surprising because it turns out that one of the reasons why job seekers invest in education is that they want to be recognized in their compensation for their level of education even when more education still raises the probability of employment.

Failure in International Cooperation in the Presence of a Third Party

Sukwhan Ahn 한국국제경영관리학회 2021 국제경영리뷰 Vol.25 No.4

게임이론의 가장 중요한 성과 중 하나는 “포크정리”라고 일컫는 이론적 결과이다. 이 정리의 내용은 한번에 그치는 (또는 단기적) 관 계에서는 협력적 결과를 만들어내지 못하는 경기자들이라도 그들이 너무 근시안적이지 않다면 장기적인 관계에서는 협력을 이룰 수 있다는 것이다. 하지만, 현실에서는 미래를 중시하는 경기자들이 장기적인 관계를 갖고 있더라고 해도 협력이 달성되지 못하는 경우가 많다. 본 연구는 이러한 현실적으로 관찰되는 사실을 설명하고자 한다. 핵심적인 것은 제3경기자의 존재이다. 즉, 두 경기자들이 협력 적인 결과를 달성할 수 있는 것이 입증되는 경우라고 해도 제3경기자가 존재하게 되면 두 경기자들간의 협력이 깨지게 된다는 것이다, 예를 들어, 둘 간의 협력이 달성되는 두 경기자 K 와 Q 가 있다고 하자. 이 두 경기자와 각각의 게임을 하게 되는 제3경기자 J 가 존재하고 있다고 하자. 현재 둘 만의 관계에서 보면 K 와 J 는 협력을 달성하지 못하고 있다. 그런데 K 는 Q 의 게임 환경에 영향을 줄 수 있는 경기자이어 K 가 Q 에 대한 자신의 태도를 적대적으로 바꾸어 J 에게 이득을 줄 수 있는 전략적인 선택을 고려할 수 있다. 즉, K 가 Q 와의 관계를 적대적으로 만들어 비록 자신이 Q 와의 게임에서 얻는 이득이 작아지더라도 J 가 얻는 이득이 K 의 손실을 상쇄하고 남을 정도로 충분히 커서 K 와 J 이 이러한 그들에게 발생하는 순이득을 적절히 분배하는 선 택을 할 수 있다는 것이다. 이런 상황에서는 ( J 의 존재를 인지하지 못한 경우에는) Q 와 K 의 관계에서 달성 가능할 것으로 판단되는 협력이 J 의 존재로 인하여 불가능하게 되는 것이다. 본 연구는 장기적 관계를 갖는 미래지향적인 경기자들은 협력 을 이룰 수 있을 것이라는 일반적인 믿음에 일종의 경고를 보내고 있다. 본 연구의 이론적 결과는 한국, 일본 및 미국의 관계를 설명하는데 도움이 된다. One of the most notable achievements of game theory is the theoretic result called “Folk Theorem”. This theorem states that players who cannot achieve cooperative outcomes in a one-period (or short-term) relationship can succeed in making cooperation available to themselves in the repeated game of a stage game sufficiently many times and they are not severely myopic. Unfortunately, there are many observations in reality in which a longer-term relationship cannot produce cooperation among the parties who are placed in a repeated game situation and attach proper importance to the future. This paper presents a realistic explanation in a game theoretic framework to show how this can the case. The idea rests on the presence of a third party. Cooperative outcomes that could be obtained in the the repeated game between the two players in the absence of a third party can be obstructed by the externality emitted from a third party. Consider two players, K and Q , who play a repeated game repeating a stage game in which pure strategy Nash equilibrium. is Pareto inefficient. Suppose that there is a third player, namely J , who is engaged in repeated game with K and Q . Suppose also that cooperation is not achieved between K and J on account of J's myopia. Both K and J struves to find a way to achieve the cooperative outcome that makes both of them better off. If by any chance K has the influence on Q , which is reflected in the games in the way that K can affect the payoff structure of both the games that Q is engaged in. To be specific, K's stance toward Q affects the payoffs of the two normal-form games that Q is engaged in, one with K and the other with J . It can be in the interest of K that it makes a strategic use of Q in order to achieve cooperation with J . That is, this strategic influecne of K on Q can benefit K if (i) the gain to J is greater than the loss to K and; (ii) K and J make an arrangement that will induce K to take a strategic advantag of Q . In this scenario, the cooperation between Q and K which is achieved is thwarted by the presence of a third party. Rather, the cooperation between K and J which is not achieved if K does not take a strategic use of Q is obtained when K comes to have an incentive to treat Q and ruin its cooperation with Q by the strategic stance toward Q . This paper clearly shows that it might be hasty to conclude that adequately forward-looking players can reach an cooperative outcome. This paper helps understand a real-world relationship between Korea, Japan and USA in support of its theoretic finding.