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Market Structure and International Trade: Business Groups in East Asia

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  • Robert C. Feenstra
  • Tzu-Han Yang
  • Gary G. Hamilton

Abstract

In this paper we study the effect of market structure on the trade performance of South Korea, Taiwan, and Japan. We center our analysis on Korea and Taiwan, countries which have very different market structures: Korea has many large, vertically-integrated business groups known as chaebol, whereas business groups in Taiwan are smaller and horizontally-integrated in the production of intermediate inputs. The exports of these countries to the United States are compared using indexes of product variety and 'product mix', which are constructed at the 5-digit industry level. It is found that Taiwan tends to export a greater variety of products to the U.S. than Korea, and this holds across nearly all industries. In addition, Taiwan exports relatively more high-priced intermediate inputs, whereas Korea exports relatively more high-priced final goods. We argue that these results confirm the importance of market structure as a determinant of trade patterns.

Suggested Citation

  • Robert C. Feenstra & Tzu-Han Yang & Gary G. Hamilton, 1993. "Market Structure and International Trade: Business Groups in East Asia," NBER Working Papers 4536, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4536
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    References listed on IDEAS

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    1. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    2. repec:fth:michin:324 is not listed on IDEAS
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    5. Donald R. Davis, 1991. "Explaining the volume of intraindustry trade: are increasing returns necessary?," International Finance Discussion Papers 411, Board of Governors of the Federal Reserve System (U.S.).
    6. Robert Z. Lawrence, 1991. "Efficient or Exclusionist: The Import Behavior of Japanese Corporate Groups," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 311-341.
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    Citations

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    Cited by:

    1. Robert C. Feenstra & Deng-Shing Huang & Gary G. Hamilton, 1997. "Business Groups and Trade in East Asia: Part 1, Networked Equilibria," NBER Working Papers 5886, National Bureau of Economic Research, Inc.
    2. Feenstra, Robert C. & Yang, Tzu-Han & Hamilton, Gary G., 1999. "Business groups and product variety in trade: evidence from South Korea, Taiwan and Japan," Journal of International Economics, Elsevier, vol. 48(1), pages 71-100, June.
    3. Yen, Meng-Feng, 2013. "The Wage Premium and Market Structure: The Case of South Korea and Taiwan," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151292, Agricultural and Applied Economics Association.
    4. Sung Hee Jwa, 1997. "Globalization and New Industrial Organization: Implications for Structural Adjustment Policies," NBER Chapters, in: Regionalism versus Multilateral Trade Arrangements, pages 313-344, National Bureau of Economic Research, Inc.
    5. Robert C. Feenstra, 1996. "U.S. Imports, 1972-1994: Data and Concordances," NBER Working Papers 5515, National Bureau of Economic Research, Inc.
    6. Laki, Mihály, 2006. "Kádár Gábor-Vági Zoltán: Hullarablás A magyar zsidók gazdasági megsemmisítése. Hannah Arendt Egyesület-Jaffa Kiadó, Budapest, 2005, 431 oldal, ára: 2940 forint [Gábor Kádár and Zoltán Vági: Robbing," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 832-842.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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