THE BEHAVIOR OF COMPETITIVE EXPORTING FIRMS UNDER MULTIPLE UNCERTAINTY

We examine the behavior of a competitive risk-averse exporting firm su bject to exchange rate and commodity price uncertainty, and to backgro und uncertainty arising from cost and production. The aim of our study is fourfold-namely to look at: (i) the robustness of the results in t raditional theory regarding the introduction of price uncertainty; (ii ) the role of forward-futures markets in the presence of background un certainty; (iii) the implications of this framework to the separation and the double-hedging theorems; and (iv) the behavior of this firm wh en missing markets are gradually introduced.