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Discriminating Monopoly, Forward Markets and International Trade

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  • Eldor, Rafael
  • Zilcha, Itzhak

Abstract

This paper analyzes the effect of uncertainty on output and export of a price-discriminating firm which sells its produce both in domestic and world markets. It is shown that under some conditions exports increase when uncertainty is introduced. In the presence of forward markets a "separation theorem" holds and total output increases to the competitive firm level, while exports are larger than those of the competitive firm. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 28 (1987)
Issue (Month): 2 (June)
Pages: 459-68

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Handle: RePEc:ier:iecrev:v:28:y:1987:i:2:p:459-68

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Cited by:
  1. Agathe Cote, 1994. "Exchange Rate Volatility and Trade," International Trade 9406001, EconWPA, revised 23 Jun 1994.
  2. Eisenschmidt, Jens & Wälde, Klaus, 2006. "International Trade, Hedging and the Demand for Forward Contracts," W.E.P. - Würzburg Economic Papers 69, University of Würzburg, Chair for Monetary Policy and International Economics.
  3. Feenstra, R.C. & Kendall, J.D., 1991. "Exchange Rate Volatility and International Prices," Papers 377, California Davis - Institute of Governmental Affairs.
  4. Udo Broll, 1993. "Foreign production and international hedging in a multinational firm," Open Economies Review, Springer, vol. 4(4), pages 425-432, December.
  5. Feenstra, Robert C. & Kendall, Jon D., 1997. "Pass-through of exchange rates and purchasing power parity," Journal of International Economics, Elsevier, vol. 43(1-2), pages 237-261, August.
  6. Lioui, Abraham & Eldor, Rafael, 1998. "Optimal spreading when spreading is optimal," Journal of Economic Dynamics and Control, Elsevier, vol. 23(2), pages 277-301, September.
  7. Frank Lehrbass, 1994. "Optimal hedging with currency forwards, calls, and calls on forwards for the competitive exporting firm facing exchange rate uncertainty," Journal of Economics, Springer, vol. 59(1), pages 51-70, February.
  8. Wei, Shang-Jin, 1999. "Currency hedging and goods trade," European Economic Review, Elsevier, vol. 43(7), pages 1371-1394, June.
  9. Alejandro Riaño, 2011. "Exports, investment and firm-level sales volatility," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 147(4), pages 643-663, November.
  10. Agathe Cote, . "Exchange Rate Volatility and Trade: A Survey," Working Papers 94-5, Bank of Canada.
  11. Eldor, Rafael & Zilcha, Itzhak, 2002. "Tax asymmetry, production and hedging," Journal of Economics and Business, Elsevier, vol. 54(3), pages 345-356.
  12. Axel F. A. Adam-Müller, 2001. "What to Do if Dollar is Not a Dollar? The Impact of Inflation Risk on Production and Risk Management," CoFE Discussion Paper 01-06, Center of Finance and Econometrics, University of Konstanz.
  13. Wong, Kit Pong, 2007. "Operational and financial hedging for exporting firms," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 459-470.
  14. Alejandro Riaño, . "The Decision to Export and the Volatility of Sales," Discussion Papers 10/12, University of Nottingham, GEP.
  15. Wong Kit Pong, 2002. "Export-Flexible Firms and Forward Markets," International Economic Journal, Taylor & Francis Journals, vol. 16(3), pages 81-95.

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