Discriminating Monopoly, Forward Markets and International Trade

Abstract

This paper analyzes the effect of uncertainty on output and export of a price-discriminating firm which sells its produce both in domestic and world markets. It is shown that under some conditions exports increase when uncertainty is introduced. In the presence of forward markets a "separation theorem" holds and total output increases to the competitive firm level, while exports are larger than those of the competitive firm. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.