Exchange Rate Fluctuations, Pass-Through, and Market Share

International Monetary Fund

No 1989/067, IMF Working Papers from International Monetary Fund

Abstract: When the exchange rate fluctuates and the market exhibits hysteresis, planning horizons of domestic and foreign competitors will matter in determining pass-through as well as relative market shares of these firms. Using the Cournot duopoly model, it is shown that if the foreign exporter is a long-term maximizer relative to the domestic firm, pass-through will be lower and average export penetration higher than otherwise.

Keywords: WP; firm; planning horizon; export firm; Japanese firm; upstart firm; rival firm's output; Exchange rates; Exports; Export prices; Exchange rate arrangements (search for similar items in EconPapers)
Pages: 24
Date: 1989-01-01
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