About
I am an applied microeconomist in the Department of Economics at National Taiwan University, with a specialization in Industrial Organization. My research agenda involves using a detailed firm-level dataset to estimate how firms' dynamic decisions affect industry performance, both in individual and strategic contexts.
You can find my CV .
Education :
Ph.D. in Economics, 2023, The Pennsylvania State University
M.A. in Economics, 2017, Korea University
B.A. in Economics, 2015, Korea University
Contact Information :
Department of Economics
National Taiwan University
No.1, Sec 4, Roosevelt Road, Taipei, 10617 Taiwan
Tel: +886-2-3366-8389
Email: jkhong@ntu.edu.tw
Working Papers
Abstract
I develop a dynamic model of strategic entry to study how the structure of sunk entry costs influences the entrant's scale decision and the long-run market outcomes. Contrary to the typical dynamic entry model, my model features that the structure of sunk costs shapes not the number of competitors but also the industry's scale distribution. I empirically assess this channel using a case study of a land-use deregulatory reform in the South Korean cinema chain industry. The deregulation is estimated to act as an entry subsidy, particularly appealing to larger-scale theaters. However, the industry suffers a 5.6 percent loss of discounted net profits due to intensified competition and increased expenses on fixed operating costs. The resulting implicit cost of the regulatory action is not uncovered by the typical model, as it obscures the shift in the distribution toward a larger scale.
In Search of (Factor-Biased) Learning by Exporting (with Davide Luparello) - Draft coming soon!
Abstract
We develop a novel production function framework to analyze learning-by-exporting with the factor-specific productivity dynamics. Contrary to common practices that view learning-by-exporting as a Hicks-neutral shifter, exporting has varied impacts on factor-augmenting productivities in our framework. Analyzing a historical period in Colombia from 1981 to 1991, we find that (1) skilled and unskilled labor are complements; (2) exporting does not improve the Hicks-neutral productivity, confirming earlier work; and (3) unskilled labor efficiency rises both absolutely and relative to skilled labor after exporting, leading exporters to become more skill-intensive. Our findings suggest a new insight into trade liberalization. Trade liberalization could have facilitated export-led industrialization, driving manufacturing productivity gains through the adoption of unskilled labor-saving technology and capitalizing on scale economies.
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 export 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
Stay or Leave?: Online Banking, Merger, and Dynamics of Bank Branches (with Minsung Park)
Description
We study the effects of a merger on banks' decisions to close brick-to-mortar branches in response to
the rise of online banking. Online banking tends to lead to reduced demand for branch services, but
the responding branch reduction can be inefficiently slow when banks strategically delay closures to
outlast competing branches. A merger can expedite branch closures for the merging banks by
internalizing such business-stealing motives. However, non-merging banks might free-ride on this
effort, slowing the overall branch reduction. Leveraging a 2015 merger between two mega banks in
South Korea, we aim to capture this trade-off in the South Korean banking industry from 2010 to
2019. Our difference-in-differences framework reveals a 25 percent reduction in branches for the
merging bank in local markets directly affected by the merger. In contrast, non-merging banks only
reduce branches by 4 percent in the same markets, underscoring the significant impact of free-riding
motives. Inspired by this evidence, we plan to develop and estimate a dynamic game of strategic
branch opening-closure to quantify the welfare implications of the merger and assess the relative
importance of two countervailing strategic motives.
Publications in Korean
Multiple of Credit Guarantee Operation as a Facilitator of Aggressive Credit Supply (with Jaesung Park), Journal of SME Finance, Volume 41, Number 1, April 2021
Encouraging Employment, Techonology Innovation and Profitability of SMEs (with Jaesung Park), Korea Review of Applied Economics , Volume 22, Number 2, June 2020
Decomposition of the Business Cycle Shock and the Default Rate of SMEs in Korea (with Jaesung Park and Sumi Na), Journal of Derivatives and Quantitative Studies , Volume 27, Number 4, November 2019
