Abstract
This paper establishes an imperfectly competitive model with Cobb-Douglas cost function to explore the exporting firm's foreign exchange rate exposure. The study finds that the substitution between exporting firm and foreign local firm and the ratio of material cost to total cost plays an important role in firm's exchange rate exposure: firm's exchange rate exposure will rise with the increasing exporting sale share in total sale, the substitution between exporting firm and foreign local firm and the ratio of material cost to total cost. In the empirical study, the model can explain over half of the industry condition with the data of Shenzhen stock market.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.