The behavior of competitive exporting firms under multiple uncertainty

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