Van H. Pham

Wal-Mart as Catalyst to U.S.-China Trade

Retail chains and the volume of imports of consumer goods from developing countries have grown sharply over the past 25 years. Wal-Marts sales, which currently account for 15% of U.S. imports of consumer goods from China, grew 90-fold over this period, while U.S. imports from China increased 30-fold. We relate these trends using a model in which scale economies in retail interact with scale economies in the import process. Combined, these scale economies amplify the effects of technological change and trade liberalization, creating a two-way relationship between the chains size and its sourcing choice. Falling trade bar- riers increase imports not only through direct reduction of input costs but also through an expanded chain and higher investment in technology. Calculations based on our model suggest that the existence of the chain more than doubles the sensitivity of imports to tariff reductions. Technological innovations account for approximately 60% of Wal-Marts growth from 19842004 and reductions in input cost, due to tariff reductions and changes in sourcing, account for 40% of this growth.

Supersize It: The Growth of Retail Chains and the Rise of the 'Big Box' Retail Format

This paper documents and explains the recent rise of big-box general merchandisers. Data from the Census of Retail Trade for 1977-2007 show that general-merchandise chains grew much faster than specialist retail chains, and that general merchandisers that added the most stores also made the biggest increases to their product offerings. We explain these facts with a stylized model in which a retailer’s scale economies interact with consumer gains from one-stop shopping to generate a complementarity between a retailer’s scale and scope.

Emulative Development through Trade Expansions: East Asian Evidence

We identify East Asian growth as an emulative process. Distilling salient facts from a set of particular cases, we construct an example to capture the essence of such technology transfer, where the government of a developing economy may provide adequate incentive for the firms of a developed economy to invest. The presence of the latter allows agents in the developing economy to acquire enough information to launch their own business but not enough to outcompete the investor. The formulation is information-theoretic and in the form of a multi-stage game. We relate our findings to recent views on the cause and future of East Asian growth.

Can Health Insurance Reduce Household Vulnerability? Evidence from Vietnam

This study provides new evidence on the impact of health insurance coverage on household vulnerability using the Vietnam Access to Resources Household Surveys (VARHS) for 2010 and 2012. We apply propensity score matching to address the non-random selection of households into health insurance status. The VARHS data allow us to include risk preference as a predictor of health insurance propensity, an important source of endogeneity between health insurance coverage and vulnerability. We estimate that health insurance helps rural households in Vietnam reduce the idiosyncratic component of utility loss by 81 per cent and the probability of being poor by 19 per cent. Our results are robust to alternative statistical specifications. To the best of our knowledge, this is the first paper measuring the impact of health insurance coverage on household ex-ante vulnerability. Our findings suggest that expanding access, reducing costs and improving efficiency in health care would have big benefits of reducing vulnerability for the poor.

A Positive Theory of Regulatory Endogenous Sunk Costs

We propose a theory of regulatory endogenous sunk costs(RESC), in which a captured regulator raises minimum quality standards when market size increases in order to protect incumbent firms. Our RESC theorys predictions that market size is unrelated to industry concentration and positively related to product quality are observationally equivalent to those of Suttons theory of `natural endogenous sunk costs (NESC), in which incumbents increase qualityinvestments to compete for a share of a growing market. The NESC theory suggests that, with higher entry costs, incumbents jockey for increased market shares by increasing quality investments. The RESC theory, however, predicts that product quality should be lower with higher entry costs. Entry costs and minimum quality standards each provide incumbents with protection from pro t erosions that entry otherwise would produce. A key implication of our analysis is the possibility that some industries might be misclassi ed as natural oligopolies. We provide a few examples of candidate RESC industries.We propose a theory of regulatory endogenous sunk costs (RESC), in which a captured regulator raises minimum quality standards when market size increases in order to protect incumbent firms. Our RESC theorys predictions that market size is unrelated to industry concentration and positively related to product quality are observationally equivalent to those of Suttons theory of natural endogenous sunk costs (NESC), in which incumbents increase quality investments to compete for a share of a growing market. The NESC theory suggests that, with higher entry costs, incumbents jockey for increased market shares by increasing quality investments. The RESC theory, however, predicts that product quality should be lower with higher entry costs. Entry costs and minimum quality standards each provide incumbents with protection from profit erosions that entry otherwise would produce. A key implication of our analysis is the possibility that some industries might be misclassified as natural oligopolies. We provide a few examples of candidate RESC industries.

One Industry at a Time: Evidence of Induced Localized Technical Gains in the East Asian Countries

This paper argues that technical change in the East Asian countries was sector-specific, took the form of learning-by-doing and was induced by relative factor prices. Usual growth accounting exercises do not account for this in the structure of the assumed aggregate production function and therefore miss these technical gains. Assumed or estimated elasticities of substitution are too high in these studies. Calculations of elasticities using factor prices are more consistent with localized technical gains in Korea, Singapore and Taiwan. I find evidence that the technical change may have been induced by policy and macroeconomic shocks affecting relative factor prices. Plant-level TFP growth calculations using the Korean Industrial Census further support the hypothesis offered here.