The purpose of this study is to analyze the effect of market opening (import) on domestic market organization, ie market structure(concentration rate) and market performance(profit rate), and to induce policy implications between oligopoly industry an...
The purpose of this study is to analyze the effect of market opening (import) on domestic market organization, ie market structure(concentration rate) and market performance(profit rate), and to induce policy implications between oligopoly industry and competition industry
The major emprical results of the study are as follows: first oligopoly industry with high market power has a positive effect of concentration rate on profit rate, which is higher than that of competition industry. It means that oligopoly industry has more negative effect on the improvement of market performance than that of competition industry
Second, the effect of import on profit rate is a positive, which means that import has no effect on the improvement of market performance and it would rather worse. Oligopoly industry has a more negative effect than competition industry. In 1983, when the level of market opening is lower and that of protection is higher, the negative effect on market performance is more serious than in 1993.
Third, the effect of import on concentration rate is a negative between oligopoly and competition industry, which means import makes domestic market more competitive. But the extent of the effect is very low with the compare to market opening in this period.
Based on these results, we discuss that market opening and import have limit effect on the improvement of market performance and structure, especially in oligopoly industry.
Under the circumstance that market function is important under WTO, these results have many implications to korea's trade and industrial policy.