Revisiting Perverse Effects on Exchange Rate Pass-Through

The effects of a change in the exchange rate on product prices are investigated using a static international duopoly model without product differentiation. A general condition is derived for perverse exchange rate pass-through assuming decreasing marginal costs for firms in two trading countries. The result is clarified on the basis of a new diagram for determining equilibrium supplies in the two countries.

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Year of publication:	2005
Authors:	Okuguchi, Koji
Published in:	International Journal of Business and Economics. - College of Business, ISSN 1607-0704. - Vol. 4.2005, 1, p. 67-76
Publisher:	College of Business
Subject:	exchange rate pass-through \| international duopoly \| decreasing marginal cost

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Extent:	application/pdf text/html
Type of publication:	Article
Classification:	F1 - Trade ; L1 - Market Structure, Firm Strategy, and Market Performance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010598927