Title
Domestic and Foreign Sales When Prices in Both Markets are Uncertain
Abstract
This paper obtains comparative static results for a firm that sells a single output domestically and abroad when prices in both markets are uncertain. Results are obtained for both constant absolute risk aversion and for Ross decreasing absolute risk aversion, using a diagrammatic analysis which exploits the properties of expected marginal utility contours. The results depend crucially on whether foreign and domestic sales are net substitutes or complements. The model is more complex and yields fewer unambiguous results – particularly in the case of substitutes – than when there is price uncertainty in only one market.
Document Type
Article
DOI
https://doi.org/10.1111/1467-8586.00166
Publication Date
2003
Recommended Citation
Dalal, Ardeshir J., and Sudhakar S. Raju. "Domestic and foreign sales when prices in both markets are uncertain." Bulletin of Economic Research 55, no. 2 (2003): 125-148.
Journal Title
Bulletin of Economic Research
