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New Zealand's Pastoral Exports: Can Small Countries Practise Pricing-to-Market?

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Author Info

  • Tantirigama, Mangalika
  • Lee, Minsoo
  • Sanyal, Amal

Abstract

Literature presumes that exporters from small countries and particularly of primary products do not practice pricing-to-market (PTM) because of lack of market power. Out paper examines New Zealand’s pastoral exports over 1988-2002 and finds strong evidence of PTM. Evidence rejects the hypothesis that New Zealand is a price taker in these markets. We find incomplete pass-through in sheep meat markets and more than complete pass-through in wool. The degree of PTM is more pronounced in meat and less, but significant, in will. Interesting co-movement in export pricing of New Zealand and Australia and a high degree of PTM are noted when the two counties together dominate a market. Generally we report a smaller PTM when there is a larger promotional expenditure in the corresponding market.

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File URL: http://purl.umn.edu/50010
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Bibliographic Info

Article provided by Review of Applied Economics in its journal Review of Applied Economics.

Volume (Year): 4 (2008)
Issue (Month): 1-2 ()
Pages:

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Handle: RePEc:ags:reapec:50010

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Web page: http://www.lincoln.ac.nz/story11874.html

Related research

Keywords: meat and wool exports; pricing-to-market; exchange rate pass through; New Zealand economy; International Relations/Trade; F12; F14; D43;

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  1. Alexius, Annika & Vredin, Anders, 1996. "Pricing-to-Market in Swedish Exports," Working Paper Series in Economics and Finance 146, Stockholm School of Economics.
  2. Jayant Menon, 1992. "Exchange rates and prices of Australian manufactured exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 128(4), pages 695-710, December.
  3. Peter Hooper & Catherine L. Mann, 1989. "Exchange Rate Pass-through in the 1980s: The Case of U.S. Imports of Manufactures," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 297-337.
  4. Kasa, Kenneth, 1992. "Adjustment costs and pricing-to-market theory and evidence," Journal of International Economics, Elsevier, vol. 32(1-2), pages 1-30, February.
  5. Adolfson, Malin, 1999. "Swedish Export Price Determination: Pricing to Market Shares?," Working Paper Series in Economics and Finance 306, Stockholm School of Economics.
  6. Sven W. Arndt & J. David Richardson, 1988. "Real-Financial Linkages Among Open Economies," NBER Working Papers 2230, National Bureau of Economic Research, Inc.
  7. Otani, Akira & Shiratsuka, Shigenori & Shirota, Toyoichiro, 2003. "The Decline in the Exchange Rate Pass-Through: Evidence from Japanese Import Prices," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 53-81, October.
  8. Feenstra, Robert C., 1989. "Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test," Journal of International Economics, Elsevier, vol. 27(1-2), pages 25-45, August.
  9. Joseph E. Gagnon, 1988. "Adjustment costs and international trade dynamics," International Finance Discussion Papers 321, Board of Governors of the Federal Reserve System (U.S.).
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