International Trade Risk and the Cost of Flexibility in Capital Investment

This chapter describes the effects of trade policy configurations and summarizes them in a probability distribution on investment value and performance. It has important implications for investment management, as actual changes in policy after the strategic and competitive strength of various businesses. However, the implicit message of this work is even more potent than its explicit insights; namely, the identification of the basic tradeoff to be confronted in the management of the effects of trade policy and trade policy risks on corporate assets. The author also examines trade policy's effect on corporate decisions to invest in the productive capacity of a certain industry.