International Trade and the Role of Market Transparency
Posted: 21 Feb 2011
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: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Strategic Pricing of Financial Options
By Volker Bieta, Udo Broll, ...
-
International Stock Market Correlations: A Sectoral Approach
By Philipp Fasnacht and Henri Loubergé
-
Liquidity Constrained Exporters: Trade and Futures Hedging
By Udo Broll and Jack E. Wahl
-
Spatial Allocation of Capital: The Role of Risk Preferences
By Udo Broll, Antonio Roldán-ponce, ...
-
The Firm Under Uncertainty: Capital Structure and Background Risk
By Udo Broll and Kit Pong Wong
-
Tariffs and Imports Mis-Invoicing Under Oligopoly
By Amit K. Biswas and Sarbajit Sengupta
-
Patient Autonomy and Education in Specific Medical Knowledge
By Daniel Lukas