Implications of financial transaction costs on the real economy: A note
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
Standard
in: Contemporary Economics, Jahrgang 8, Nr. 1, 31.03.2014, S. 113-118.
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
Harvard
APA
Vancouver
Bibtex
}
RIS
TY - JOUR
T1 - Implications of financial transaction costs on the real economy
T2 - A note
AU - Pelster, Matthias
PY - 2014/3/31
Y1 - 2014/3/31
N2 - This note studies the influence of a financial transaction tax and transaction costs on the optimal production and hedging strategies of a duopoly. Firms are exposed to demand uncertainty that leads to price risk and can hedge their risk exposure on a forward market. However, the forward position is subject to transaction costs. We investigate two settings: first, we explore the Cournot duopoly with a simultaneous hedging opportunity; second, we analyze the case with a sequential forward market. We show that in both settings transaction costs lead to a less competitive market and that prices increase as the producers limit their output.
AB - This note studies the influence of a financial transaction tax and transaction costs on the optimal production and hedging strategies of a duopoly. Firms are exposed to demand uncertainty that leads to price risk and can hedge their risk exposure on a forward market. However, the forward position is subject to transaction costs. We investigate two settings: first, we explore the Cournot duopoly with a simultaneous hedging opportunity; second, we analyze the case with a sequential forward market. We show that in both settings transaction costs lead to a less competitive market and that prices increase as the producers limit their output.
KW - Economics, empirical/statistics
KW - price risk
KW - Hedging
KW - transaction cost
KW - financial transaction tax
KW - duopoly
U2 - 10.5709/ce.1897-9254.135
DO - 10.5709/ce.1897-9254.135
M3 - Journal articles
VL - 8
SP - 113
EP - 118
JO - Contemporary Economics
JF - Contemporary Economics
SN - 2084-0845
IS - 1
ER -