The incomplete pass-through of exchange rates to prices is a well-documented phenomenon. Firms respond optimally to exchange rate shocks by adjusting margins and buying inputs from regions with more advantageous terms of trade. Consumers, in turn, substitute goods that become more…
Oligopolio
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As Freixas and Rochet (1997) mention, in perfect competition the optimal choice for banks is determined by the point where intermediation margins are equal to operating costs. In this scenario, market equilibrium is not affected by a bank’s actions. In contrast, when a bank has market power, it…
