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Please use this identifier to cite or link to this item: http://hdl.handle.net/10481/31501

Title: International monopoly under uncertainty
Authors: Aray, Henry
Issue Date: 2007
Abstract: A domestic monopolistic firm has the option to service a foreign market through export or by setting up a plant in the host country under exchange rate uncertainty. We analyze the effect of the parameters of the demand and cost functions on hysteresis. We also show results on the effect of taxation and labor cost in attracting or avoiding relocation. We find that when the firm is multinational it pays more taxes. Much more importantly, a tax rate reduction is effective in attracting investment and avoiding relocation. When the firm is multinational it also incurs lower labor costs. However, labor cost is not determinant in the location of production.
Publisher: Universidad de Granada. Departamento de Teoría e Historia Económica
Series/Report no.: The Papers;07/05
Keywords: Exchange rate uncertainty
Real option
Taxation
Labor cost
URI: http://hdl.handle.net/10481/31501
Rights : Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License
Citation: Aray, H. International monopoly under uncertainty. Universidad de Granada. Departamento de Teoría e Historia Económica (2007). (The Papers; 07/05). [http://hdl.handle.net/10481/31501]
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