Hyungjin Kim

Modern semiconductor production is vertical, granular, and concentrated. Standard trade models treat export controls as output wedges that leave input costs unchanged. This paper shows that in a bilateral oligopoly, such controls also renegotiate upstream input prices. I develop a vertical production network model in which AI-chip designers negotiate with a concentrated set of High-Bandwidth Memory (HBM) suppliers. Using administrative customs data, I document destination-specific unit-value divergences consistent with relationship-specific bargaining; bilateral link prices are not directly observed but are recovered from equilibrium moment conditions. In the calibrated model, upstream suppliers act as shock absorbers: they lower input prices for the targeted buyer to preserve volume, dampening the regulatory impact. This deflationary channel is active when buyer surplus is log-submodular in its input price and the trade wedge — a condition the baseline calibration satisfies. In the calibrated baseline under the benchmark export-control scenario, the upstream price adjustment is roughly one-seventh of the downstream markup response; this ratio varies substantially with demand curvature and bargaining leverage (see sensitivity analysis). These findings imply that models that treat input prices as fixed — the standard approach in quantitative trade analysis — overestimate the competitive reallocation caused by export controls in concentrated high-tech supply chains.

We prove equilibrium uniqueness for a class of combinatorial entry games with endogenous pricing—games in which each firm chooses a subset of available actions (e.g., which countries to produce in) and firms then compete under variable markups à la Atkeson and Burstein (2008). The combination of combinatorial entry and endogenous markups creates a three-way circularity—activation shifts market shares, which change markups, which feed back into activation incentives—that existing frameworks do not address. We show this circularity is self-limiting: when firms have private information on action-specific fixed costs, the activation decision reduces to a threshold system whose contraction modulus decomposes into three interpretable forces. The modulus vanishes at both extremes of noise—large noise dampens responses while small noise pushes thresholds into the tails of the cost distribution—so when its peak is below one the Bayesian Nash equilibrium is unique for all noise levels—a condition verifiable from model primitives without solving the game. Each firm's activation problem remains supermodular despite the pricing channel, so existing combinatorial solvers apply without modification. In numerical experiments on cloud-infrastructure deployment with up to 2⁴⁰ candidate subsets per firm, the peak contraction modulus is 0.95, confirming global uniqueness.

Globalization is often accompanied by declining barriers to both international trade and multinational production (MP), yet their joint implications for regional economies remain insufficiently understood. This paper examines how China's reductions in trade and MP barriers affected regional inequality in Korea, focusing on welfare and population distribution across regions. We first provide reduced-form evidence that regional exposure to MP, alongside trade, is an important and independent determinant of local employment. We then develop a multi-country, multi-sector general equilibrium model with trade, MP, and internal migration to quantify how China's cost reductions over 2000–2007 reshaped regional welfare and population allocation in Korea. The aggregate welfare gain is approximately 2.0%, with regional per-worker gains ranging from 1.7% in Seoul/Capital to 2.5% in the Southeast. Trade accounts for 1.4 percentage points of this gain, internal migration for 0.55 percentage points, and the vertical MP channel — through which affiliates abroad source inputs from the domestic parent — for less than 0.05 percentage points. By jointly analyzing trade and MP, the paper shows that ignoring the MP channel would attenuate the estimated import-competition effect and misattribute part of the employment response to trade exposure alone.

How does intermediated trade alter the response of bilateral trade flows to cost shocks? We show that when firms can reroute shipments through intermediary hubs, the bilateral trade elasticity is strictly attenuated relative to the standard gravity benchmark — attenuated by a factor equal to the share of trade currently flowing directly between origin and destination. We establish this result theoretically and validate it using transaction-level data from a Korean petrochemical trading house with 25 offices worldwide, where we observe the complete buyer–seller–intermediary triad for every shipment. In this network, 84.5% of origin–destination pairs route all trade through hubs, so a direct-route cost shock leaves their bilateral trade volume entirely unchanged — while standard gravity would predict a large negative response for those same pairs. Aggregating across all routes, standard gravity overstates the bilateral trade-flow response to a uniform cost shock by roughly an order of magnitude in this network (value-weighted factor of 6.5; range 3×–13× depending on the substitution elasticity). These findings imply that bilateral gravity models systematically overstate trade losses from tariff increases in sectors with deep intermediation.