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Piecemeal Oligopoly, Exchange Rate Uncertainty, and Trade Policy

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  • Fernando Mesa

Abstract

RESUMEN:Este artículo analiza el efecto sistemático de la volatilidad de la tasa de cambio, cuando un gobierno local debe evaluar políticas comerciales estratégicas lineales y cuadráticas. Este ejercicio se realiza para modelosde mercado Cournot y Bertran. El modelo prueba que tanto el esquema lineal como el cuadrático tienen el mismo efecto sobre el bienestar social de los paises, y que la volatilidad de la tasa de cambio doméstica lleva a los gobiernos a reducir los subsidios a las exportaciones o bajan los impuestos a las exportaciones, de acuerdo a la variable estratégica elegida por las firmas. La tasa de cambio extrangera tiene diferentes efectos dependiendo de si las firmas producen bajos rendimientos a escalas constantes o decrecientes.ABSTRACT:This paper examines the systematic effect of the exchange rate volatility, when a local government has to evaluate linear and quadratic strategic trade policies. The exercise is realized for both Cournot and Bertrand markets fashions. The model proves that the linear or quadratic scheme have the same effect on the countries´ social welfare, and that the volatility of the domestic exchange rate leads governments to reduce export subsidies or to cutexport taxes, according to the strategic variable chosen by firms. The foreignexchange rate volatility has different effects if firms produce under constantreturn or decreasing return of scale.

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Bibliographic Info

Article provided by UNIVERSIDAD DEL ROSARIO in its journal REVISTA DE ECONOMÍA DEL ROSARIO.

Volume (Year): (2009)
Issue (Month): ()
Pages:

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Handle: RePEc:col:000151:008799

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Keywords: Comercio; Estructuras de Mercado y de Precios; Estrategia de Firma; Información e Incertidumbre.;

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  1. Viaene, Jean-Marie & de Vries, Casper G., 1992. "International trade and exchange rate volatility," European Economic Review, Elsevier, vol. 36(6), pages 1311-1321, August.
  2. Kala Krishna & Kathleen Hogan & Phillip Swagel, 1994. "The Nonoptimality of Optimal Trade Policies: The U.S. Automobile Industry Revisited, 1979-1985," NBER Chapters, in: Empirical Studies of Strategic Trade Policy, pages 11-40 National Bureau of Economic Research, Inc.
  3. Laussel, D., 1990. "Strategic Commercial Policy Revisited: A Supply Function Equilibrium Model," G.R.E.Q.A.M. 90a05, Universite Aix-Marseille III.
  4. Caglayan, Mustafa, 2000. "Uncertainty Resolution and Strategic Trade Policy in Oligopolistic Industries," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 311-18, May.
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