In a framework for risk management a model of an international firm under exchange rate uncertainty is discussed. The firm can cross-hedge the exchange rate risk by using forwards of other country's currencies correlated to the spot exchange rate in question. The study investigates the...

In a successive Cournot oligopoly, we show the welfare effects of entry inthe final goods market with no scale economies but with cost difference between thefirms. If the input market is very concentrated, entry in the final goods market alwaysincreases welfare. If the input market is moderately...

We show the incentive for divisionalization by a monopolist producer. Incontrast to the previous literature, where divisionalization occurs for product marketadvantage, we show that divisionalization occurs if it provides strategic advantage inthe labor market. With unionized labor market, we...

This paper considers the effects of entry in the final goods market when the input market is imperfectly competitive. We show that entry of a new firm may increase profit of the incumbent if the technology of the entrant is sufficiently inferior to that of the incumbent...

This paper examines the production and hedging decisions of the competitive firm under price uncertainty when the firm is not only risk averse but also regret averse. Regret-averse preferences are characterized by a modified utility function that includes disutility from having chosen ex post...

Given a commercial banking firm facing credit risk we develop a dynamic hedging model where the bank management can use credit derivatives. In a continuous-time framework optimal hedging strategies, deposit and loan decisions and consumption are studied. It is shown that the optimal hedge ratio...

The study suggests : an increase in the international division of labour according to the intra-trade scenario does not imply that nations have to negatively compete for high export quotas, rather their international interdependenee is highly beneficial for both world and domestic economic...

This paper examines one possible explanation for intra-trade flows derived in light of an international environment characterized by product differentiation, economies of scale, and monopolistic competition. The analysis may be structured within a more general formulated Heckscher-Ohlin...

Intra-foreign direct investment flows indicate an intensive specialization effect within the various domestic branches of the international economy combined with an increasing expansion of the differentiated product sortiments of the world's multinational firms. Rationalisation of operations on...

In the pure theory of international trade the foundation of commodity exchange is based upon differences in autarky relative prices. The theory of comparative advantage attempts to precisely define this foundation by formulating a systematic relationship between the pattern of comparative...