Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

The purpose of the study is to analyze the effects of market liberalization policy of Korea and Japan on productivity performance in petroleum refining sector. According to the results of productivity estimation using non-parametric Malmquist productivity indexes, Korean petroleum refining sector has improved productivity after market liberalization, but its level was lower than that of Japanese petroleum sector. In addition, according to the identification of innovative firms which shifted production possibilities frontier, Korean petroleum firms played a signification role in shifting production frontier before market liberalization, but it was vice versa after market liberalization. These results may result from differences in policies and mechanism between the two countries. However, there has been no market movements n Korea such as mergers and acquisitions and business cooperation between petroleum firms which was observed very actively in Japanese petroleum refining sector. More investment in R＆D sector and vertical integration connecting up and down streams or creating new energy business areas as a specialized energy firm are suggested to improve competitiveness of Korean firms.