Welcome! I am a Ph.D. candidate at the Department of Economics, the Pennsylvania State University. My primary field is empirical industrial organization. My research interests focus on the estimation of individual firm dynamic decisions and examining their implications for industry performance. I will be on the job market during the 2022-2023 academic year.

You can find my CV here.

Job Market Paper

Sunk Cost and Entrant's Choice of Capacity

Abstract: This paper studies how sunk entry costs influence firm entry and the entrant’s scale of operation in oligopolistic industries. When the scale is infeasible to adjust after entry, sunk costs shape market outcomes by altering both the number of competitors and the industry’s scale distribution. Exploiting a land-use and construction regulatory reform, I empirically assess these channels in competition between South Korean cinema chains. I specify and estimate a dynamic game of chain-theater opening by cinema chains. The model features that chains decide the scale of the new theater at entry and bear sunk costs varying with their scale choice. I find that (i) the chain’s screen-level profits decline in both the same-chain and rival-chain screens; (ii) the sunk costs for larger-scale theaters decrease more than for smaller-scale theaters following the reform. A counterfactual analysis establishes that the industry has more larger-scale theaters by 27.8% than it would if sunk costs remained unchanged. Despite the expansion of larger-scale theaters, the industry suffers a 5.6% loss of net profits due to intensified competition and increased expenses on fixed operating costs. In contrast, a model without theater scale choice spuriously predicts a 27.3% add to the industry’s net profits as it obscures the shift in the distribution toward a larger scale.

Presentation : 17th EGSC at Washington University in St. Louis

Working Papers

The Differential Effect of Exporting on Input Productivities

Abstract: Many empirical studies document that entering the export market raises a firm's productivity. I study whether entering the export market results in differential increases in input productivities at the firm-level (non-neutral change). I develop a model that separately identifies firm-level skilled and unskilled labor-augmenting productivities, and material input prices. Applying the model to data on the Colombian apparel manufacturers, I find that exporting raises the skilled labor-augmenting productivity 7.2-percentage point more than the unskilled counterpart. A counterfactual simulation in which exporting raises the two productivities equally, the mean-differences in skilled-to-unskilled employee ratios between exporters and non-exporters are 50 percent smaller than the data counterparts. The result suggests that non-neutral productivity gain from trade is central in shaping the input allocation differences between exporters and non-exporters.

Trade Dynamics of Colombian Chemical Plants: Productivity and Trade Cost Complementarity

Abstract: This paper estimates a dynamic model of the firm's joint export and import decision process. In the model, participating in trade improves within-period profits and future productivity. In addition, doing one trade activity facilitates the other by reducing the associated fixed/sunk costs. Employing a Bayesian MCMC estimator, I fit the model to Colombian chemical plant panel data from 1981 to 1985. Two findings stand out: (i) importing increases future productivity significantly while exporting does not. (ii) importing facilitates exporting by lowering the sunk costs of entering the foreign market while exporting facilitates importing by decreasing the fixed costs of continuing import. A counterfactual simulation shows that subsidizing the fixed costs of importing is the most effective among trade cost subsidy schemes in improving the average productivity and firm value.

Work in Progress

Online Banking and the Dynamics of Branch Consolidation (with Minsung Park)

Description: We study the dynamics of brick-to-barter branch consolidation in response to rollouts of online banking. This consolidation can be inefficient when banks strategically delay branch closure in hopes of outlasting their rival branches. Leveraging a horizontal merger between two mega banks in 2015, we aim to quantify this inefficiency in the South Korean banking industry (2010-2019). Employing detailed micro-data on commercial bank branches, we find evidence of strategic delay played by the banks. Inspired by this evidence, we develop and estimate a dynamic game of branch closure to quantify the efficiency improvement induced by the 2015 horizontal merger.

Publications in Korean

Decomposition of Business Cycle Shocks and the Default Rate of SMEs in Korea, with Jaesung Park and Sumi Na, Korean Journal of Futures and Options, Volume 27, Number 4, November 2019

Encouraging Employment, Technology Innovation and Profitability of SMEs, with Jaesung Park, Korean Association of Applied Economics, Volume 22, Number 2, June 2020

Operating Multiple of Credit Guarantees as a Facilitator of Aggressive Credit Supply, with Jaesung Park, Journal of SME Finance, Volume 41, Number 1, April 2021