Market Structure and International Trade: Business Groups in East Asia
In this paper we study the effect of market structure on the trade performance of South Korea, Taiwan, and Japan. We center our analysis on Korea and Taiwan, countries which have very different market structures: Korea has many large, vertically-integrated business groups known as chaebol, whereas business groups in Taiwan are smaller and horizontally-integrated in the production of intermediate inputs. The exports of these countries to the United States are compared using indexes of product variety and 'product mix', which are constructed at the 5-digit industry level. It is found that Taiwan tends to export a greater variety of products to the U.S. than Korea, and this holds across nearly all industries. In addition, Taiwan exports relatively more high-priced intermediate inputs, whereas Korea exports relatively more high-priced final goods. We argue that these results confirm the importance of market structure as a determinant of trade patterns.
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|Date of creation:||1993|
|Contact details of provider:|| Postal: UNIVERSITY OF CALIFORNIA DAVIS, INSTITUTE OF GOVERNMENTAL AFFAIRS, RESEARCH PROGRAM IN APPLIED MACROECONOMICS AND MACRO POLICY, DAVIS CALIFORNIA 95616 U.S.A.|
References listed on IDEAS
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- Donald R. Davis, 1991. "Explaining the volume of intraindustry trade: are increasing returns necessary?," International Finance Discussion Papers 411, Board of Governors of the Federal Reserve System (U.S.).
- Dani Rodrik, 1994.
"Industrial Organization and Product Quality: Evidence from South Korean and Taiwanese Exports,"
in: Empirical Studies of Strategic Trade Policy, pages 195-210
National Bureau of Economic Research, Inc.
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- Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
- repec:fth:michin:324 is not listed on IDEAS
- Hummels, D. & Levinsohn, J., 1993. "Product Differentiation as a Source of Comparative Advantage?," Working Papers 324, Research Seminar in International Economics, University of Michigan.
- Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
- Robert Z. Lawrence, 1991. "Efficient or Exclusionist: The Import Behavior of Japanese Corporate Groups," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 311-341.
- Sato, Kazuo, 1976. "The Ideal Log-Change Index Number," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 223-228, May.
- K.C. Fung, 1991. "Characteristics of Japanese Industrial Groups and Their Potential Impact on U. S . - Japanese Trade," NBER Chapters, in: Empirical Studies of Commercial Policy, pages 137-168 National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)
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