EXPORT, DOMESTIC SALES AND IMPORT: INTERCONNECTIONS ON EXPORTER’S MARKET

Abstract

The paper develops a model of partial equilibrium of an export-oriented market, which includes three markets for a differentiated product: the domestic markets of a selected exporting country and a global exporter (a set of other exporting countries that supply to the external sales market of the exporting country), as well as the external, the combined market of importing countries, which considers the competition between the exporting country and the global exporter. At the same time, it was assumed that imports in exporting countries are small and can be excluded from consideration. The new statement takes into account the supply of importsto the domestic market of the exporting country. In a state close to equilibrium, the model ensures the fulfillment of the following relationships: 1) the external supplies of the exporting country are positively related to their own production. For the dependence of the external supplies of the exporting country on the output volumes of the global exporter, the conditionsunder which it has a negative or positive relationship are specified. In general, the nature of this relationship depends on the size of the exporting country's market, and in most casesthis relationship is negative; 2) the import of the exporting country positively depends on theoutput of the global exporter, solutions have been found in which the dependence on the output of the exporting country can be both negative and positive; 3) the price of the domesticmarket of the exporting country is negatively related to the output of the global exporter, its relationship with the production of the exporting country in most cases is negative. Based on the model, the impact of supply and demand shocks on the export-oriented market is analyzed. The scenario associated with the fall in global barley production is considered,which, in general, confirmed the adequacy of the model. The theoretical significance of thestudy lies in substantiating the nature of the relationships that arise in the sales markets of the exporting country, in particular, depending on the size of the exporter's sales market. The practical relevance of the model lies in its great scientific potential for solving problemsrelated to assessing the impact of supply and demand shocks on the domestic market, with the development of measures to stabilize it.