Bargaining in international trade under exchange rate uncertainty

Shabtai Donnenfeld and Itzhak Zilcha

No 215, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: This paper studies the implications of various contracting alternatives between exporting and importing firms on the value of production and international transactions. Since contracts are usually determined when exchange rate is uncertain, we show that under some conditions renegotiating these initial trade contracts can be beneficial to both parties. In such Nash-type bargaining solutions the initial contract is the disagreement point. It is shown that when renegotiation is possible, the firm produces more and the expected export is higher. Our results have some implications to well-known results concerning vertical integration as well.

Date: 1994
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Related works:
Journal Article: Bargaining in International Trade under Exchange-Rate Uncertainty (1995)
Working Paper: Bargaining in the International Trade Under Exchange Rate Uncertainty (1993)
Working Paper: Barganing in International Trade under Exchange Rate Uncertainty (1993)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kondp2:215

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