Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society

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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society

Volume 24, Issue 2 (June 2013)

Cover pages
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R&D Technology Choice in Durable Goods Monopoly, Pages 72–84

Jong-Hee Hahn, Seongmin Kim

Abstract | PDF (120 kilobytes)

This paper examines a durable-good monopolist's R&D decision in new product development. We show that the monopolist without commitment faces a time inconsistency problem concerning the choice of research technology, and as a result ends up choosing a safer research project and investing less than the commitment solution. This implies more frequent but smaller quality improvements in durable-good markets. It is shown that the time inconsistency problem in fact serves to increase social welfare by inducing the firm to choose a socially optimal research project.

Household Utility Function in the Computable Overlapping Generations Model, Pages 85–109

Doyoung Kim, Sungwhee Shin

Abstract | PDF (205 kilobytes)

We consider the specification of the household utility function in the overlapping generations model. We apply the two criteria for the selection of utility function: the zero long-run elasticity of labor supply and the hump-shaped consumption profile. We identify some appropriate utility functions that satisfy both criteria. We compare the two utility functions through the simulations of both the household behavior and the macroeconomic behavior in overlapping generations model with aging population. The Kimball and Shapiro (KS) utility function seems to be a promising one for the simulation of household behavior and overlapping generations model.

Strategic Limitation of Market Size and Product Quality for Entry, Pages 110–124

Hyung Bae

Abstract | PDF (132 kilobytes)

This paper derives an entrant's optimal choice of quality and market size. We derive a subgame perfect equilibrium of two stage games in which the entrant chooses its product quality and product market size in the first stage and competes with the incumbent in price in the second stage. We find that the entrant's optimal strategy in the first stage involves only the limitation of market size. However, when quality is given, an entrant with lower quality than a critical level does not need to limit market size but an entrant with higher quality than the critical level needs to limit market size. When market size is given, an entrant with a smaller market than a critical size does not need to limit quality but an entrant with a bigger market than the critical level needs to limit quality.

New Evidence on Determinants of Income Inequality, Pages 125–162

Kwanho Shin, Donggyun Shin

Abstract | PDF (866 kilobytes)

This paper investigates determinants of income inequality. To refect that income distribution underwent structural changes recently, we analyze various inequality measures: the Gini coefficient, the Estimated Household Income Inequality (EHII) index, and the income share of the top 1 percent. Analysis of country-level panel data suggests that, contrary to the Kuznetz hypothesis, income inequality has worsened recently among developed countries, which is more evident in the income share of the top 1%. The apparent negative effects of trade openness on income inequality are explained by other control variables, and the negative impact of financial openness is observed when the top 1 percent is analyzed. Technological progress is positively associated with income inequality, as measured by the Gini or the top 1 percent, but not the EHII. It is also found that, while income inequality worsens in the degree to which individuals can participate in the political process of their country, it is reduced by expanded government expenditures.

Empirical Dynamics of Regional Aged Dependency Ratio in South Korea, Pages 163–192

Hyoungjong Kim, Yitaek Park, Hunchang Lee

Abstract | PDF (1456 kilobytes)

This paper deals with the changes of aged dependency ratio across the 211 administrative districtions of South Korea between 1995 to 2011. The results show the dynamics of empirical distribution and Theil-L inequality indices for aged dependency ratio. The paper also analyzes the cause of aging inequality among regions. We find that the increase of aging inequality in regional level was mainly due to population mobility before 2005. However, the regional aging inequality is decreasing recently.


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