International Trade and the Role of Market Transparency

Posted: 21 Feb 2011

See all articles by Udo Broll

Udo Broll

Dresden University of Technology - Faculty of Economics and Business Management

Bernhard Eckwert

Bielefeld University - Department of Business Administration and Economics

Kit Pong Wong

University of Hong Kong

Date Written: December 1, 2010

Abstract

The paper examines the economic role of market transparency on the decision problems of an international firm. Transparency is described in terms of the informativeness of a publicly observable signal. With higher transparency, the signal conveys more precise information about the random foreign exchange rate. We analyze the interaction between market transparency, ex ante expected production, domestic sales, and exports of the firm. Furthermore, we discuss the welfare implications of more transparency in the foreign exchange market for the firm and domestic consumers.

Keywords: Blackwell theorem, information system, transparency, hedging, international trade

JEL Classification: F11, F23, G14, G15

Suggested Citation

Broll, Udo and Eckwert, Bernhard and Wong, Keith Kit Pong, International Trade and the Role of Market Transparency (December 1, 2010). Available at SSRN: https://ssrn.com/abstract=1765285 or http://dx.doi.org/10.2139/ssrn.1765285

Udo Broll (Contact Author)

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

Bernhard Eckwert

Bielefeld University - Department of Business Administration and Economics ( email )

D-33501 Bielefeld
Germany
+49 521 106 6926 (Phone)
+49 521 106 6416 (Fax)

Keith Kit Pong Wong

University of Hong Kong ( email )

Faculty of Business and Economics
University of Hong Kong
Hong Kong, Nil Nil
Hong Kong
(852) 2859-1044 (Phone)
(852) 2548-1152 (Fax)

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