Research

Working Papers

Consequences of Indian Import Penetration in the US Pharmaceutical Market (Job Market Paper)

Indian pharmaceutical firms vastly increased generic drug exports to Western countries, and particularly the United States, in response to India amending its patent protection law in 2005. This paper demonstrates that Indian import penetration in the U.S. pharmaceutical industry was stronger among drugs that included active pharmaceutical ingredients which Indian firms had the capability to manufacture before 2005. These 'treated' drugs experienced a larger drop in prices and increased competition from Indian firms. However, non-Indian firms responded to the trade shock by exiting 'treated' drugs, in that they were more likely to discontinue and less likely to newly register 'treated' drugs. This strategic change was stronger for firms with larger shares of drug sales exposed to Indian import penetration. Rather than exploring new pharmaceutical ingredients, non-Indian firms opted to continue selling drugs they already had experience producing. The law change also led to disruptions in foreign supply chains, with 'treated' drugs facing more drug shortages. These findings show how competition in the pharmaceutical industry is shaped by supply side shocks and how a trade-driven influx of competition could crowd out incumbent firms.

Affirmative Action based on Gender in the Procurement Market

Affirmative action has been used to support minority-led firms in the procurement market. While the previous literature has focused on the utilization of minority-led firms in procurement contracts, this paper examines corporate strategies among female-owned businesses. In South Korea, a law revision mandated a quota in the public procurement market to contract from 'certified' female firms, i.e., firms certified by the government as being owned by female CEO(s). I find that 'certified' female firms increased bid participation and won more bids, and two channels are involved: the previous contracting relationship between institutions and firms and the information sharing in the network among firms. I also investigate if male-owned firms, non-targets of the affirmative action, strategically changed their ownership to female-owned in order to be eligible for affirmative action. While affirmative action caused previously uncertified female-owned firms to complete the female certification, there was no such evidence from male-owned firms. Certified female firms obtained a larger share of the revenue made by both procurement and private sectors. Affirmative action may increase the revenue share of the policy's target outside its realm.

Induced Innovation, Technology Adoption, and the Environment: Biopesticide Product Innovation in the United States with Erica Chuang

Innovation over and adoption of green inputs will be necessary to minimize the environmental damages from economic activity. However, the composition of that innovation may have consequences for adoption behavior. This paper attempts to address this issue by studying how a major change in the demand for organic food affected product composition in the market for non-toxic pesticides for use in organic agriculture, also called biopesticides. Using an announcement of a major expansion of organic food offerings from one of the largest grocery chains in the U.S. in 2006, we find evidence that an increase in demand for organic produce may have led to an expansion in the share of newly-registered biopesticides among the universe of pesticide products. However, much of this increase has come from generic products, suggesting a lack of innovation behavior. Further, we take advantage of data on pesticide use in California, one of the country's largest agricultural producers, and find an increase in average biopesticide use per farm as well as lower toxicity of used pesticides post-shock. However, this is likely not driven by the pesticide product choice set, but rather an increase in returns to organic or mixed-use production. The results have implications for the extent to which demand-side shocks result in induced innovation as well as the factors that may influence green technology adoption.

Research in Progress

Public Procurement Market and the Direction of Innovation Activities

Procurement contracts provide financial resources to firms but also lead firms to accumulate capital needed for those contracts. Firms may use these capitals for innovation activities after the contract is finished. This paper uses a randomization process in bidding processes in the Korean public procurement market and finds that bid winners were more likely to apply for patents after they won the bid. Using the textual similarity between procurement contracts and applied patents, I will continue the analysis to investigate the potential impacts of attaining procurement contracts on the direction of the following innovation activities.

Publications

Factors of Risks of Household Over indebtedness Using a New Measure Based on Conditional Quantiles with Lee, D. J., Korea Review of Applied Economics, 2017 (in Korean)

This paper suggests a new measure of household over-indebtedness based on the concept of conditional quantiles, and use it to examine the factors of the over-indebtedness. We first consider a distribution of household debt conditional on the overall payment ability, and specify the over-indebted household as the one whose debt exceeds θ-quantile of the conditional distribution. We find a clear evidence of heterogeneous behavior in that over-indebted households’ income and real estate elasticities of debt are significantly higher. We also find that lower-income and elderly-headed households have significantly higher debt/income ratio compared to the other age and income groups.