haku: @indexterm entry conditions / yhteensä: 180
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| Tekijä: | Giovannetti, G. |
| Otsikko: | Exchange rate volatility, prices and trade flows |
| Lehti: | Revue d'Economie Industrielle
1991 : 1ER TRIMESTRE, NO. 55, p. 25-38 |
| Asiasana: | EXCHANGE RATES PRICES TRADE MARKET STRUCTURE ENTRY CONDITIONS UNCERTAINTY RISK |
| Kieli: | eng |
| Tiivistelmä: | The issue is addressed how the responses of firms to the fluctuations of exchange rates depend on 1. sunk costs, 2. uncertainty, 3. degree of risk aversion, 4. market structure. The behaviour of firms already producing for the domestic market and deciding whether to enter a new foreign market is examined. Arguments are presented that the existence of asymmetric entry and exit conditions due to sunk costs induces hysterisis. Also the presence of uncertainty and risk aversion can induce trade inertia since it creates an incentive for firms to remain temporarily in their current position, even though a change in position would be profitable at the current exchange rate. |
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