Exchange Rate Exposure and Foreign Market Competition: Evidence from Japanese Firms
AbstractIn this paper, we focus on the impact of foreign competition on exposure, or the responsiveness of profits to fluctuations in exchange rates. We find that, of the 15 four-digit level Japanese export industries in our sample, 10 industries are better characterized as Cournot competitors in foreign markets, rather than colluding firms. Depending on the industry, exposure elasticities range from 0.5% to 8.5%, with an average of around 2.5%. These elasticities, on the whole, are much higher than those found in earlier research. Collusive exporters tend to have higher elasticities than competitive exporters.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 78 (2005)
Issue (Month): 1 (January)
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Web page: http://www.journals.uchicago.edu/JB/
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- Bartram, Söhnke M. & Brown, Gregory W. & Minton, Bernadette, 2009.
"Resolving the Exposure Puzzle: The Many Facets of Exchange Rate Exposure,"
14041, University Library of Munich, Germany.
- Bartram, Söhnke M. & Brown, Gregory W. & Minton, Bernadette A., 2010. "Resolving the exposure puzzle: The many facets of exchange rate exposure," Journal of Financial Economics, Elsevier, vol. 95(2), pages 148-173, February.
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