Amann, Erwin; Marin, Dalia:

Risk-Sharing in International Trade: an Analysis of Countertrade

In: Journal of Industrial Economics, Jg. 42 (1994) ; Nr. 1, S. 63
Zeitschriftenaufsatz / Fach: Wirtschaftswissenschaften
Abstract:
Countertrade agreements in international trade refer to a trade practice in which an exporter agrees to purchase back commodities proportional to his original export sale in the future. The paper provides a rationale for why such an agreement might be efficient. More specifically, the paper argues that countertrade represents a rational response to market incompleteness by allowing the forward selling of commodities where no organized future market exists. This way countertrade helps to reduce risk by providing information on future market conditions and by offering insurance against random fluctuations in market conditions. ABSTRACT FROM AUTHOR Copyright of Journal of Industrial Economics is the property of Blackwell Publishing Limited and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts); Countertrade agreements in international trade refer to a trade practice in which an exporter agrees to purchase back commodities proportional to his original export sale in the future. The paper provides a rationale for why such an agreement might be efficient. More specifically, the paper argues that countertrade represents a rational response to market incompleteness by allowing the forward selling of commodities where no organized future market exists. This way countertrade helps to reduce risk by providing information on future market conditions and by offering insurance against random fluctuations in market conditions.