Competition Law and Economics
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Competition Law and Economics

Developments, Policies and Enforcement Trends in the US and Korea

Edited by Jay P. Choi, Wonhyuk Lim and Sang-Hyop Lee

In this exciting new book, an international team of experts compare market structures, in both global and Korean contexts, particularly focusing on the impact of foreign competition on market concentration and ways to improve market structure. It thoroughly investigates core competition problems, including international abuses of dominance, mergers and collusion, and vertical restraints. Contributions move beyond explaining the laws and practices of enforcement agencies, offering readers an insight into the trend of an ever-increasing interdependence among national economies, complemented by analyses of recent developments in the US and Canada.
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Chapter 4: An empirical study of the competitive pressure of the foreign sector in Korea

Suil Lee


The author carries out empirical analysis on potential and actual competitive pressure from the foreign sector on the profitability of domestic industry in Korea, in order to identify the importance of the foreign sector on competition in the domestic market. Estimation results show that potential competitive pressure, defined as a response of imports to changes in an industry’s profitability, operates in Korea with a one-year time lag. There is, however, no empirical evidence of the existence of actual competitive pressure—the negative impact of increasing imports on industry profitability. The author concludes that imports increase in response to increases in the profitability of the domestic industry and that importers may choose to enjoy higher profits by stringing along with domestic firms rather than fiercely competing with them.

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