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Author Ahmed, Anas A
Title Optimal capacity investment and pricing across international markets under exchange rate uncertainty and duopoly competition
book jacket
Descript 94 p
Note Source: Dissertation Abstracts International, Volume: 71-07, Section: B, page: 4448
Adviser: Murat Erkoc
Thesis (Ph.D.)--University of Miami, 2010
The main objective of this dissertation is to develop an operational policy for a multinational manufacturer to hedge against exchange rate uncertainties and competition. In the first part, we consider a monopolistic settings, where no competition exists in either markets. We consider a single product and multiperiod planning horizon. We investigate three scenarios: (1) Early Commitment to Price and Quantity, (2) Early Commitment to Price and Postponing Quantity, and (3) Postponement of Prices and Quantities. For each scenario, we consider two cases: (i) production or both markets takes place only at home country, or (ii) production is carried out locally at both countries. Because of long-lead times, the capacity investment must done before the selling season begins when the exchange rate between the two countries is uncertain. In this part, we employ a Geometric Brownian Motion to model the exchange rate. The manufacturer can hedge against exchange rate uncertainty by postponing prices and allocation of capacity between home and foreign markets until the realization of the exchange rate. We derive the optimal capacity and the optimal prices for each scenario, and investigate the impact of the exchange rate parameters on optimal prices, optimal capacity and capacity allocation decisions under each scenario
In the second part of this dissertation, we consider a duopoly competition in the foreign country. We consider a single period setting and we model the exchange rate as a random variable. We assume two scenarios: (1) Exogenous Model, where the price of the foreign manufacturer is set a priori, and (2) Endogenous Model, where the prices are set simultaneously based on a Nash Game outcome. In the Exogenous Model, we study the impact of exchange rate and foreign manufacturer's price on optimal capacity and prices. In the Endogenous Model, we investigate the impact of competition and exchange rate on optimal capacities and optimal prices. We show how competition can impact the decision of the home manufacturer to enter the foreign market
School code: 0125
Host Item Dissertation Abstracts International 71-07B
Subject Business Administration, Management
Economics, Commerce-Business
Engineering, Industrial
Alt Author University of Miami
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