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Revisiting Perverse Effects on Exchange Rate Pass-Through

Author

Listed:
  • Koji Okuguchi

    (Department of Economics and Information, Gifu Shotoku Gakuen University, Japan)

Abstract

The effects of a change in the exchange rate on product prices are investigated using a static international duopoly model without product differentiation. A general condition is derived for perverse exchange rate pass-through assuming decreasing marginal costs for firms in two trading countries. The result is clarified on the basis of a new diagram for determining equilibrium supplies in the two countries.

Suggested Citation

  • Koji Okuguchi, 2005. "Revisiting Perverse Effects on Exchange Rate Pass-Through," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 4(1), pages 67-76, April.
    • Handle: RePEc:ijb:journl:v:4:y:2005:i:1:p:67-76
    as

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    File URL: https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.04-1/pdf/vol_4-1-6.pdf
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    File URL: https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.04-1/abstract/06.html
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    References listed on IDEAS

    as
    1. Gross, Dominique M. & Schmitt, Nicolas, 2000. "Exchange rate pass-through and dynamic oligopoly: an empirical investigation," Journal of International Economics, Elsevier, vol. 52(1), pages 89-112, October.
    2. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1243-1272, September.
    3. Feenstra, Robert C. & Gagnon, Joseph E. & Knetter, Michael M., 1996. "Market share and exchange rate pass-through in world automobile trade," Journal of International Economics, Elsevier, vol. 40(1-2), pages 187-207, February.
    4. Tivig, Thusnelda, 1996. "Exchange rate pass-through in two-period duopoly," International Journal of Industrial Organization, Elsevier, vol. 14(5), pages 631-645, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Takeshi Yamazaki, 2016. "On the Works of Professor Koji Okuguchi," Springer Series in Game Theory, in: Pierre von Mouche & Federico Quartieri (ed.), Equilibrium Theory for Cournot Oligopolies and Related Games, pages 7-13, Springer.

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    More about this item

    Keywords

    exchange rate pass-through; international duopoly; decreasing marginal cost;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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