ABSTRACT
This chapter looks at the firms selling in depressed overseas markets at the time of devaluation, and begins with the firms which cut foreign-currency prices after devaluation. It is true that Gatley Hosiery announced, immediately after devaluation, that it would cut foreign-currency prices by about half the amount of devaluation, for exports to all overseas countries, except Russia. The number of firms selling in depressed overseas markets which cut their prices was perhaps greater than economic theory would have predicted. It is therefore certain that a firm selling in perfect competition in an overseas market will sell all of its output at the foreign currency prices ruling after devaluation. Inverness took its decisions in the belief that it did face a kinked oligopoly demand curve though it now doubts whether, at least for small price cuts, the danger of retaliation was as great as that implies.
