earticle

영어

This paper investigates the relationship between market structure and productivity in the Korean economy. Market structure is measured by the markup ratio, that is, the degree to which prices are set over marginal cost. The paper's novel feature is that it employs SVAR models to identify shocks to market structure and to estimate their effect on labor productivity. Empirical findings of this paper show that labor productivity decreases in the short run after a shock that raises market concentration whereas labor productivity increases in the long run. This suggests that, based on the long-run effect on productivity, the Schumpeterian view on this issue seems valid in the Korean economy.