The model and related empirical examination in this paper explain why previous studies document both positive and negative correlations between exchange rate volatility and observed levels of foreign direct investment. Using a simple model of cross-border mergers and acquisitions, it argues that...

Exchange rate exposure of firms diminishes when imported intermediates and exports are denominated in currencies that move together. Appreciations of the domestic currency, raising foreign currency export prices, then also reduce marginal costs, allowing firms to counter the increase in foreign...

Analysing different arrangements of inter-country trade, this paper investigates the impact of exchange rate risk on production and expected trade. We address the question how a mean-preserving spread of the exchange rate distribution effects strategic aspects of different trading arrangements....

We study trade policy in a two-sector Krugman type model of trade. We conduct a general analysis allowing for three different instruments: tariffs, export taxes and production subsidies. For each instrument we consider unilateral trade policy without retaliation. When carefully disentangling the...

Owing to the WTO exemption that allows governments to subsidise arms exports, the arms trade is one of the few remaining areas of trade where we observe lump-sum and per unit transfers to exports. This paper examines the effect of arms controls, in the form of licensing delays, on the incentives...

We study trade policy in a two-sector Krugman-type trade model with home market effects. We conduct a general analysis allowing for three different instruments: tariffs, export taxes and production subsidies. For each instrument, we consider unilateral trade policy without retaliation. When...

One central result in the strategic trade literature is that governments should not support domestic ”losers” but domestic ”winners”. We show that when first-mover advantages are taken into account, the reverse holds, governments have stronger incentives to support domestic ”losers”...

By using a Cournot model where a domestic firm competes with a foreign firm in the domestic market, this paper suggests that, in addition to countervailing duty measures allowed by the World Trade Organization, product differentiation between the goods produced by the domestic and foreign firms...

This paper extends the model of Brander and Spencer (1985) to study whether the simultaneous elimination of export subsidies is feasible. It is shown that the incentive for subsidizing exports to reoccur will exist when all subsidizing countries are forced to withdraw their subsidies on exports...

We ask whether production related subsidies have a role to play in explaining Chinese firms' export performance. We, firstly, implement an estimation approach that allows for both direct and indirect ("spillover") effects of the subsidy on the probability to export. Secondly, our approach...