Works in Progress
Does the Internet Replace Brick-and-Mortar Bank Branches?
This paper examines the effect of the internet on market structure and consumer welfare in the US retail banking industry. The internet is expected to be a substitute for bank branches as consumers can use more online banking and this effect can lead to branch closures. On the other hand, the internet can be a complementary to branches because consumers can more easily make deposits or open a new bank account online when more high-speed internet is available which can expand markets, and in turn, increase the number of bank branches. Observing the changes in the number of rival bank branches after the change in the internet, banks can open or close more branches. I estimate a dynamic branch opening-closure game in continuous time to quantify these opposing effects. The results show that more internet connections can cause consumer welfare loss due to branch closures when the internet penetration is not sufficiently high. However, if internet connections are provided to more than 80% of households, consumers experience a welfare gain. The gains are especially large in small and low-income markets.
Nested Pseudo-Likelihood Estimation of Dynamic Discrete Choice Games: A Replication and Retrospective, with Jason Blevins
The Economic Effects of the Canned Tuna Cartel, with Ryan Mansley, Nathan Miller, Marc Remer and Matthew Weinberg
Publications
Kim, Minhae, Ryan Mansley, Nathan Miller, Marc Remer, and Matthew Weinberg (2022).
Price-Fixing Allegations in the Canned Tuna Industry: A Look at the Data, Antitrust Bulletin, 68(1), 154–163. published versionIn December 2014, Thai Union, the parent company of Chicken of the Sea canned tuna announced that it had reached an agreement to acquire Bumble Bee tuna from Lion Capital. In the course of standard merger review, the Department of Justice subpoenaed the merging parties as well as the parent company of StarKist to investigate possible collusion among the major producers of canned tuna. This led to several class action lawsuits and a criminal conviction for price fixing. This paper describes how these firms were alleged to have colluded and uses retail scanner data to document how prices and promotional activity changed while the cartel was in operation. Avenues for future research are discussed.
Blevins, Jason, and Minhae Kim.
Nested Pseudo Likelihood Estimation of Continuous-Time Dynamic Discrete Games. Journal of Econometrics, 238(2), 105576. published versionWe introduce a sequential estimator for continuous time dynamic discrete choice models (single-agent models and games) by adapting the nested pseudo likelihood (NPL) estimator of Aguirregabiria and Mira (2002, 2007), developed for discrete time models with discrete time data, to the continuous time case with data sampled either discretely (i.e., uniformly-spaced snapshot data) or continuously. We establish conditions for consistency and asymptotic normality of the estimator, a local convergence condition, and, for single agent models, a zero Jacobian property assuring local convergence. We carry out a series of Monte Carlo experiments using an entry-exit game with five heterogeneous firms to confirm the large-sample properties and demonstrate finite-sample bias reduction via iteration. In our simulations we show that the convergence issues documented for the NPL estimator in discrete time models are less likely to affect comparable continuous-time models. We also show that there can be large bias in economically-relevant parameters, such as the competitive effect and entry cost, from estimating a misspecified discrete time model when in fact the data generating process is a continuous time model.
Kim, Minhae (2023). Unintended Effects of Broadband Grants on Bank Branches. Southern Economic Journal, 90(2), 389–413.
published versionThe Community Connect Broadband Grant Program was created in 2002 to provide financial assistance for the provision of broadband service in rural areas. Although it was launched to strengthen the rural economy, it is possible that an increase in internet usage due to the program could have induced bank branch closures, which could have had unintended effects on the economy. This paper discusses the mechanism by which the program affects bank branches and estimates the magnitude of its effects using an event study model and find that receiving benefits from this program decreases the number of bank branches.
Scientific software
Annotated MATLAB Translation of the Aguirregabiria and Mira (2007) Replication Code, with Jason Blevins
This is an annotated MATLAB translation of the Monte Carlo source code for the experiments in Section 4 of
Aguirregabiria and Mira (2007). The original source code was written in Gauss by Victor Aguirregabiria. This is close to a direct translation of the original Gauss code to MATLAB, with annotations added. Source code can be found here.