Risky Business: Intra-Firm Trade with Foreign Commercial Risk and Asymmetric Insurance
AbstractA partial equilibrium model is used to examine the international production allocation of a two-plant risk averse multinational firm which is confronted with uncertainty with respect to foreign sales. The firm has price-discriminating monopoly power in both markets and uses specific factors in both plants, producing an identical good. We focus on the question how unequal insurance facilities in the firm’s home and host market influence the firm’s international production decision and its level of intra-firm trade.
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Bibliographic InfoPaper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 9808.
Date of creation: Mar 1998
Date of revision:
multinationals; uncertainty; export insurance; intra-firm trade;
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