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Fujita, Y. (2007) Toward a New Modeling of International Economics: An Attempt to Reformulate an International Trade Model Based on Real Option Theory. Physica A: Statistical Mechanics and its Applications, 383, 507-512.

has been cited by the following article:

• TITLE: Backfiring Effect of Uncertain Trade Policy

  AUTHORS: Yasunori Fujita

  KEYWORDS: Backfiring Effect, Uncertain Trade Policy, Optimal Stopping Theory, Value of Waiting

  JOURNAL NAME: Modern Economy, Vol.7 No.5, May 18, 2016

  ABSTRACT: Constructing a stochastic international trade model where exporting firm faces uncertain trade policy expressed by geometric Brownian motion, we examine the effect of an increase in the trade policy uncertainty on the optimal start time of export. It is revealed that when the trade policy is less uncertain than a threshold level, an increase in the trade policy uncertainty accelerates the optimal exporting timing of export, which is in sharp contrast to the standard result that an increase in the uncertainty postpones the optimal timing. It is also revealed that such a stochastic version of the backfiring effect reduces the world welfare if demand for exported products is low, starting export is costly or future is not important.