The Effect of the Trade Pattern of the Automobile Industry on Productivity (in Korean)

Dukhee Lee (), Hyunjeong Kim () and Misuk Jung ()
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Dukhee Lee: ICU (Information and Communications University)
Hyunjeong Kim: Institute for Monetary and Economic Research, The Bank of Korea
Misuk Jung: ICU (Information and Communications University)

Economic Analysis (Quarterly), 2006, vol. 12, issue 2, 147-179

Abstract: The recent globalisation of the world economy has strengthened competition in all industries. Facing an intensely competitive environment, a firm's choice of trade pattern is one of the most important strategies in enhancing its competitiveness. Among inter-firm trade patterns the cooperative trade system has proved to be superior to arms-length or market-oriented trade in the long run. Within the cooperative trade system, the transition from dedicated (single supplier) trade to network trade is proving a remarkable phenomenon. In this paper, firstly by way of a review of the literature and a theoretical model, we compare the relative economic efficiencies between the dedicated and the network trade systems in terms of facilitation of competition, cost reduction, quality improvement, knowledge and information sharing, and learning effect. Then in our empirical analysis, we examine the relationship between alternative trade patterns and the productivity of the automobile industry. The main results of the theoretical model show that network trade results in a higher profit level than dedicated trade as a rule, although network trade is less stable than dedicated trade. Empirical study reveals that increasing network trade leads to higher productivity.

Keywords: network trade; exclusive trade; economic efficiency; total factor productivity (search for similar items in EconPapers)
JEL-codes: D23 L14 L22 (search for similar items in EconPapers)
Date: 2006
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