Abstract
We analyze the impact of market structure on the trade performance
of South Korea, Taiwan and Japan. South Korea has many large, vertically-integrated
business groups known as 'chaebol', whereas business groups in Taiwan
are smaller and more specialized in the production of intermediate
inputs. We test the hypotheses that a greater presence of business
groups leads to less product variety but higher product quality,
using data on exports from these countries to the United States.
We find that Taiwan tends to export a greater variety of products
to the US than Korea, and this holds particularly for final goods.
In addition, Taiwan exports higher-quality intermediate inputs, whereas
Korea exports higher-quality final goods. A comparison with Japan
is also presented, which has greater product variety in its sales
to the US than either Taiwan or Korea, due to its larger size.
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