Export Credit as a Mechanism for Price Discrimination
Export credit is shown to be a mechanism that facilitates price discrimination. The scenario considered is one of competitive exporters' selling to a cash importer with a relatively inelastic demand schedule and a credit importer with a relatively elastic demand schedule. The spot markets of the two importing countries is assumed to be perfectly and costlessly arbitraged. In the absence of export credit, price discrimination is not possible, even with government intervention. If export credit is used but the government does not intervene, price discrimination is also not possible. Export credit used in conjunction with targeted export price subsidies or loan guarantees generate rents from price discrimination, despite the perfect arbitrage constraint.
Year of publication: |
1998
|
---|---|
Authors: | Vercammen, James |
Published in: |
Canadian Journal of Economics. - Canadian Economics Association - CEA. - Vol. 31.1998, 2, p. 279-294
|
Publisher: |
Canadian Economics Association - CEA |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Agricultural marketing : structural models for price analysis
Vercammen, James, (2011)
-
Information‐rich wheat markets in the early days of COVID‐19
Vercammen, James, (2020)
-
Cooperative Investment and the Value of Contracting with Transaction Costs
Vercammen, James, (2002)
- More ...