IDEAS home Printed from https://ideas.repec.org/h/eme/isetez/s1571-0386(2012)0000022008.html
   My bibliography  Save this book chapter

International Portfolio Choice: The Case of Market Competition

In: Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications

Author

Listed:
  • Makram Bellalah
  • Sonia Ben Said

Abstract

Purpose – This chapter studies a two-country model in which firms have the opportunity to invest directly both in home and foreign activities while operating in the context of imperfectly competitive markets for final goods and services. The model is an extension of Choi (1989). Methodology approach – The firm is assumed to maximize the expected utility derived from the sequence of present and future levels of wealth, subject to budget constraint. We apply the Hamilton–Jacobi–Bellman approach. Findings – In this chapter we show that the degree of imperfect competition may be different in the two countries and measured by the elasticity of the demand functions. In this model, we derive the optimal proportion of foreign investment, which is divided into two ratios. The first ratio is a hedging position. The second one is a speculative position. Originality – Our model shows the role of alternative finance in the presence of differences between investment in two cases, namely, the case of market competition and the case of no market imperfections. This effect is shown by investment proportion and asset pricing relation.

Suggested Citation

  • Makram Bellalah & Sonia Ben Said, 2012. "International Portfolio Choice: The Case of Market Competition," International Symposia in Economic Theory and Econometrics, in: Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, pages 53-66, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-0386(2012)0000022008
    DOI: 10.1108/S1571-0386(2012)0000022008
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-0386(2012)0000022008/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-0386(2012)0000022008/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S1571-0386(2012)0000022008
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-0386(2012)0000022008/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/S1571-0386(2012)0000022008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:isetez:s1571-0386(2012)0000022008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.