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  • P-ISSN 1738-656X
  • E-ISSN 2586-4130
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한국개발연구. Vol. 36, No. 4, November 2014, pp. 71-102

https://doi.org/10.23895/kdijep.2014.36.4.71

× KDI Open Access is a program of fully open access journals to facilitate the widest possible dissemination of high-quality research. All research articles published in KDI JEP are immediately, permanently and freely available online for everyone to read, download and share in terms of the Creative Commons Attribution 4.0 International License.

An Empirical Analysis on the Effects of Parallel Reimportation: The Case of Korean Automobile Market

Woo Hyun Chang

Author & Article History

Manuscript received 15 March 2014; revision received 19 March 2014; accepted 29 September 2014.

Abstract

This paper examines the possibility of ‘parallel reimportation’, the reimportation of goods originally produced in the country and exported to another country by profit-pursuing arbitrageurs. The chance of parallel reimportation implies unusually high level of market power of domestic enterprises, and promoting parallel reimportation can be an effective welfare-enhancing, competition-generating policy for the situation. Motivated by the finding, this paper proposes a methodology to measure the welfare effects of parallel reimportation. Specifically, this paper makes use of a structural empirical model to estimate the demand and supply system of Korean automobile market for performing a counterfactual experiment to measure the welfare effects of the parallel reimportation. The results indicates that parallel reimportation can enhance social welfare considerably by increasing consumer surplus and government tax revenue altogether, though it reduces the producer surplus.

Keywords

재병행수입(Parallel Reimportation), 구조모형 추정(Structural Estimation), 반사실적 실험(Counterfactual Experiment), 자동차시장(Automobile Market)

JEL Code

F14, L11, L62

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