Chapter 1: Multiproduct Competition in the Global EconomyThis paper presents a simple model of heterogeneous multiproduct firms to examine their strategic decisions on the product scope in the global economy. I find that there are several different types of equilibria depending on technological difference and relative cost advantage of domestic and foreign firms. When each firm has local cost advantage and technological difference between firms is sufficiently large, firms reallocate resources toward their more profitable products. By contrast, when there exists a small technological difference or global cost advantage, the more productive firm may expand the product line contrary to existing core competence literature. This is because a high-productivity firm can increase its market power by expanding its product range while its rival's product line expansion is limited by cost disadvantage. Chapter 2: Production Sharing and Exchange Rate Pass-ThroughThis paper proposes a theoretical background for various possibilities of exchange pass-through and expenditure-switching by investigating the effect of different channels through which exchange rate shocks affect firms' decisions on pricing and entry and exit. I extend the model of exchange rate pass-through with endogenous markups built by Rodriguez-Lopez (2011) introducing the intermediate input sector: domestic and imported intermediate inputs. I show that the degrees of exchange rate pass-through and expenditure switching depend on the shares of imported inputs in total costs. According to the relative sizes of these shares, exchange rate movements might lead to different cost shocks to each trading nation. When the imported input shares are located within some range, a low but positive rate of pass-through to aggregate import prices can be derived in the model. In addition, low levels of exchange rate pass-through to aggregate import prices can coexist with negligible movements in trade flows unlike Rodriguez-Lopez. The results of this paper also provide a potential explanation for the fact that the degree of pass-through varies across countries and industries.Chapter 3: Exchange Rate Pass-Through in Korean Manufacturing IndustriesThis paper examines exchange rate pass-through into Korean export prices at the industry level using disaggreated trade data. Unlike traditional approaches, I construct a testable model in which both the intensive and extensive margins are operative. I find that more import-intensive industries in Korea have higher exchange rate pass-through into their export prices. This is because aggregate export prices are affected not only by changes in firms' marginal costs, but also by variations in the composition of exporters due to changes in the exporting cut-off. In addition, I show that the relative value of the destination market currency should be also considered when estimating exchange rate pass-through regardless of a high proportion of dollar invoicing of Korean exports and imports. Finally, I find that pass-through is increasing both in Korea's share in total import of the destination market and in Korea's comparative advantage industries.
Read
