According to standard theory, an increase in demand should raise prices of goods, given factor prices. Empirically, however, prices appear to be unaffected by short-run variations in demand. This paper suggests an explanation of this observation. If customers react slowly to price changes and...

A structural dynamic model of price and quantity adjustment is estimated on time series data for exports and export prices. Two sources of dynamics are considered: customer markets and preset prices. As predicted by the customer market model, the market share adjusts slowly after a change in the...

This paper analyzes how international side-payments can be used to facilitate international trade negotiations. The authors present a model where many countries trade many goods and they calculate, by use of the Shapley value, international income transfers that will induce nations to eliminate...