| The first chapter examines the roles of over-investment, over-production, and over-borrowing of firms in the financial crisis in Korea in 1997. Herding or group effect has been used to explain how over-investment may occur even when all firms are rational. The paper also tests where the investment of firms in Korea before and after the financial crisis showed group effect.; The second chapter examines the use of subsidies by a country to encourage the production of an intermediate input and a final product in a model with international rivalry between firms in two countries. The choice of subsidies in several cases are examined, dependent on whether the firms in each country are vertically integrated.; The last chapter studies the optimal level of domestic government's R&D subsidy in the frame work of vertically related and Cournot oligopolistic international market. It shows optimal R&D subsidy crucially depends on the characteristics of R&D, and the level of Intellectual Property Right protection in foreign country. |
