IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/123.html
   My bibliography  Save this paper

Export supply, capacity, and relative prices

Author

Listed:
  • Faini, Ricardo

Abstract

In the neoclassical approach to specifying an export supply equation, relative prices and capacity are assumed to play a crucial role in domestic firms'decisions to supply exports. In the Keynesian approach, the willingness of domestic firms to supply foreign markets is considered to be largely a function of domestic demand pressure. Keynesian analyses do not allow for the impact of relative prices. This paper blends the two approaches in a model,in which a firm is assumed to choose, first, the level of productive capacity and, then, one period later, to determine production and allocation between foreign and domestic markets on the basis of realized prices, demand conditions, and installed capacity. The conclusion: both prices and capacity are significant determinants of export supply.

Suggested Citation

  • Faini, Ricardo, 1988. "Export supply, capacity, and relative prices," Policy Research Working Paper Series 123, The World Bank.
  • Handle: RePEc:wbk:wbrwps:123
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1988/11/01/000009265_3960927081751/Rendered/PDF/multi0page.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kiviet, Jan F., 1985. "Model selection test procedures in a single linear equation of a dynamic simultaneous system and their defects in small samples," Journal of Econometrics, Elsevier, vol. 28(3), pages 327-362, June.
    2. Marian E. Bond, 1985. "Export Demand and Supply for Groups of Non-Oil Developing Countries (La demande et l'offre d'exportations dans différents groupes de pays en développement non pétroliers) (Demanda y oferta de expor," IMF Staff Papers, Palgrave Macmillan, vol. 32(1), pages 56-77, March.
    3. Haynes, Stephen E & Stone, Joe A, 1983. "Specification of Supply Behavior in International Trade," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 626-632, November.
    4. Dunlevy, James A, 1980. "A Test of the Capacity Pressure Hypothesis within a Simultaneous Equations Model of Export Performance," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 131-135, February.
    5. Morris Goldstein & Mohsin S. Khan, 2017. "The Supply and Demand for Exports: A Simultaneous Approach," World Scientific Book Chapters, in: TRADE CURRENCIES AND FINANCE, chapter 2, pages 83-104, World Scientific Publishing Co. Pte. Ltd..
    6. Ulrich R. Kohli, 1978. "A Gross National Product Function and the Derived Demand for Imports and Supply of Exports," Canadian Journal of Economics, Canadian Economics Association, vol. 11(2), pages 167-182, May.
    7. W. Erwin Diewert, 1986. "Export Supply and Import Demand Functions: A Production Theory Approach," NBER Working Papers 2011, National Bureau of Economic Research, Inc.
    8. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-247, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Newman, John L. & Lavy, Victor & de Vreyer, Philippe, 1995. "Export and output supply functions with endogenous domestic prices," Journal of International Economics, Elsevier, vol. 38(1-2), pages 119-141, February.
    2. Milner, Chris & Zgovu, Evious, 2006. "A natural experiment for identifying the impact of 'natural' trade barriers on exports," Journal of Development Economics, Elsevier, vol. 80(1), pages 251-268, June.
    3. Rudy Rahmaddi & Masaru Ichihashi, 2011. "How Do Foreign and Domestic Demand Affect Exports Performance? An Econometric Investigation of Indonesia's Exports," IDEC DP2 Series 1-4, Hiroshima University, Graduate School for International Development and Cooperation (IDEC), revised Jan 2012.
    4. Hillberry, Russell & Hummels, David, 2013. "Trade Elasticity Parameters for a Computable General Equilibrium Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1213-1269, Elsevier.
    5. Staehr, Karsten, 2021. "Export performance and capacity pressures in Central and Eastern Europe," International Economics, Elsevier, vol. 165(C), pages 204-217.
    6. Koo, Won W. & Golz, Joel T. & Uhm, Ihn H., 1991. "United States and Canadian Free Trade Agreement: Economic Implications," Agricultural Economics Reports 23210, North Dakota State University, Department of Agribusiness and Applied Economics.
    7. Bahmani-Oskooee, Mohsen & Goswamil, Gour G. & Talukdar, Bidyut Kumar, 2005. "Exchange rate sensitivity of the Canadian bilateral inpayments and outpayments," Economic Modelling, Elsevier, vol. 22(4), pages 745-757, July.
    8. Patrick Artus, 1987. "Les exportations industrielles sont-elles déterminées par l'offre ou par la demande ?," Revue Économique, Programme National Persée, vol. 38(5), pages 995-1016.
    9. Riveros, Luis A., 1989. "The impact of labor costs on manufactured exports in developing countries : an econometric analysis," Policy Research Working Paper Series 204, The World Bank.
    10. Truett, Lila J. & Truett, Dale B., 2003. "A cost function analysis of import demand and growth in South Africa," Journal of Development Economics, Elsevier, vol. 70(2), pages 425-442, April.
    11. Feleke, Shiferaw T. & Walters, Lurleen M., 2005. "Global Coffee Import Demand in a New Era: Implications for Developing Countries," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 1(2), pages 1-15.
    12. Bahmani-Oskooee, Mohsen & Goswami, Gour Gobinda, 2004. "Exchange rate sensitivity of Japan's bilateral trade flows," Japan and the World Economy, Elsevier, vol. 16(1), pages 1-15, January.
    13. Andrew M. Warner, 1992. "Import demand and supply with relatively few theoretical or empirical puzzles," International Finance Discussion Papers 433, Board of Governors of the Federal Reserve System (U.S.).
    14. Lila J. Truett & Dale B. Truett, 2011. "Whither Germany and the EMU In a Challenging Environment?," Working Papers 0019, College of Business, University of Texas at San Antonio.
    15. Robert C. Feenstra, 1989. "Auctioning U.S. Import Quotas, Foreign Response, and Alternative Policies," NBER Working Papers 2839, National Bureau of Economic Research, Inc.
    16. Koo, Won W. & Karemera, David, 1992. "Trade Creation and Diversion Effects of the U.S.-Canadian Free Trade Agreement," Agricultural Economics Reports 23345, North Dakota State University, Department of Agribusiness and Applied Economics.
    17. Truett, Lila J. & Truett, Dale B., 2002. "The demand for imports in Italy: A production analysis," International Review of Economics & Finance, Elsevier, vol. 11(4), pages 393-409.
    18. Lila J. Truett & Dale B. Truett, 2005. "European Integration and Production in the French Economy," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 304-316, April.
    19. Truett, Lila J. & Truett, Dale B., 1998. "The demand for imports in Korea: a production analysis approach," Journal of Development Economics, Elsevier, vol. 56(1), pages 97-114, June.
    20. Newman, John L. & Lavy, Victor & Salomon, Raoul & de Vreyer, Philippe, 1990. "Firms'responses to relative price changes in Cote d'Ivoire : the implications for export subsidies and devaluations," Policy Research Working Paper Series 550, The World Bank.

    More about this item

    Keywords

    Geographical Information Systems; Economic Theory&Research; Environmental Economics&Policies; Access to Markets; Markets and Market Access;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    Statistics

    Access and download statistics

    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:wbk:wbrwps:123. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.