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Exchange Rates and Strategic Pricing: The Case of Swedish Machinery Exports

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  • Athukorala, Premachandra
  • Menon, Jayant

Abstract

This paper examines the impact of exchange-rate changes on export pricing behavior through the estimation of export price equations for Swedish exports of machinery and transport equipment and four subcategories therein. The results support the pricing to market hypothesis that exporters adjust their profit margins in response to exchange-rate changes or remain competitive in the world market. Thus, the main conclusion of this study is that no matter how small a country is in terms of its market share, if specialized in a range of products, there is no presumption that it is a price-taker in the world market. Copyright 1995 by Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.

Volume (Year): 57 (1995)
Issue (Month): 4 (November)
Pages: 533-46

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Handle: RePEc:bla:obuest:v:57:y:1995:i:4:p:533-46

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  1. Aw, Bee Yan & Batra, Geeta & Roberts, Mark J., 2001. "Firm heterogeneity and export-domestic price differentials: A study of Taiwanese electronics products," Journal of International Economics, Elsevier, Elsevier, vol. 54(1), pages 149-169, June.
  2. Eleanor Doyle, 2004. "Exchange rate pass-through in a small open economy: the Anglo-Irish case," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(5), pages 443-455.
  3. Roberto Basile & Anna Giunta & Jeffrey Nugent, 2003. "Foreign Expansion by Italian Manufacturing Firms in the Nineties: an Ordered Probit Analysis," Review of Industrial Organization, Springer, Springer, vol. 23(1), pages 1-24, August.
  4. Douglas Steel & Alan King, 2004. "Exchange Rate Pass-through: The Role of Regime Changes," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 18(3), pages 301-322.
  5. Tilak Abeysinghe & Tan Lin Yeok, 1998. "Exchange rate appreciation and export competitiveness. The case of Singapore," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 30(1), pages 51-55.
  6. Michael Bleaney, 1997. "Invoicing-Currency Effects in the Pricing of Japanese Exports of Manufactures," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 30(4), pages 968-74, November.
  7. Fang, WenShwo & Lai, YiHao & Thompson, Henry, 2007. "Exchange rates, exchange risk, and Asian export revenue," International Review of Economics & Finance, Elsevier, Elsevier, vol. 16(2), pages 237-254.
  8. Aksoy, Yunus & Riyanto, Yohanes E, 2000. "Exchange Rate Pass-Through in Vertically Related Markets," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 8(2), pages 235-51, May.
  9. Menon, Jayant, 1996. "The Degree and Determinants of Exchange Rate Pass-through: Market Structure, Non-tariff Barriers and Multinational Corporations," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(435), pages 434-44, March.
  10. Rtta Hanninen & Anne Toppinen, 1999. "Long-run price effects of exchange rate changes in Finnish pulp and paper exports," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(8), pages 947-956.
  11. Menon, Jayant, 1995. "The Relationship between the Law of One Price and Exchange Rate Pass-through," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 48(4), pages 551-568.
  12. Gross, Dominique M. & Schmitt, Nicolas, 2000. "Exchange rate pass-through and dynamic oligopoly: an empirical investigation," Journal of International Economics, Elsevier, Elsevier, vol. 52(1), pages 89-112, October.
  13. Dominique M. Gross & Nicolas Schmitt, 1999. "Exchange Rate Pass-Through and Dynamic Oligopoly," IMF Working Papers 99/47, International Monetary Fund.
  14. Salvador Gil-Pareja, 2000. "Exchange rates and European countries’ export prices: An empirical test for asymmetries in pricing to market behavior," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 136(1), pages 1-23, March.
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Cited by:
  1. repec:ebl:ecbull:v:6:y:2005:i:14:p:1-12 is not listed on IDEAS
  2. Minsoo Lee & Moonjoong Tcha, 2005. "Pass-Through Elasticity, Substitution and Market Share: the Case for Sheep Meat Exports," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(2), pages 209-228.
  3. Oner Guncavdi & Benan Zeki Orbay, 2004. "The Effects of Foreign Exchange Rate Movements on Domestic Prices in the Turkish Manufacturing Industry," EconoQuantum, Revista de Economia y Negocios, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 1(1), pages 41-56, Julio-Dic.
  4. Adolfson, Malin, 1999. "Swedish Export Price Determination: Pricing to Market Shares?," Working Paper Series 96, Sveriges Riksbank (Central Bank of Sweden).
  5. Michel Fouquin & Nanno Mulder & Laurence Nayman & Khalid Sekkat & Joffrey Malek Mansour, 2001. "Sector Sensitivity to Exchange Rate Fluctuations," Working Papers 2001-11, CEPII research center.
  6. Carlo Gola, 2000. "Export pricing strategy of Italian firms: from the depreciation of the lira to the euro," LIUC Papers in Economics, Cattaneo University (LIUC) 77, Cattaneo University (LIUC).
  7. Sabine Stephan, 2005. "Pricing-to-Market Effects in Foreign Trade Prices. Evidence from a Cointegration Approach for Germany," IMK Working Paper 07-2005, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  8. Bowe, Michael & Saltvedt, Thina M., 2004. "Currency invoicing practices, exchange rate volatility and pricing-to-market: evidence from product level data," International Business Review, Elsevier, Elsevier, vol. 13(3), pages 281-308, June.
  9. Barhoumi, Karim, 2006. "Differences in long run exchange rate pass-through into import prices in developing countries: An empirical investigation," Economic Modelling, Elsevier, Elsevier, vol. 23(6), pages 926-951, December.
  10. Tzokas, Nikolaos & Hart, Susan & Argouslidis, Paris & Saren, Michael, 2000. "Strategic pricing in export markets: empirical evidence from the UK," International Business Review, Elsevier, Elsevier, vol. 9(1), pages 95-117, February.
  11. Gross, Dominique M. & Schmitt, Nicolas, 2000. "Exchange rate pass-through and dynamic oligopoly: an empirical investigation," Journal of International Economics, Elsevier, Elsevier, vol. 52(1), pages 89-112, October.
  12. Kerstin Stahn, 2011. "Changes in Import Pricing Behaviour: Evidence for Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 231(4), pages 522-545, August.
  13. Ulrich Fritsche & Camille Logeay & Kirsten Lommatzsch & Katja Rietzler & Sabine Stephan & Rudolf Zwiener unter Mitarb. von Cansel Kiziltepe & Christian Proano-Acosta, 2005. "Auswirkungen von länderspezifischen Differenzen in der Lohn-, Preisniveau- und Produktivitätsentwicklung auf Wachstum und Beschäftigung in den Ländern des Euroraums: Endbericht ; Forschungsprojekt," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, DIW Berlin, German Institute for Economic Research, volume 8, number pbk8, July.
  14. barhoumi karim, 2005. "Long Run Exchange Rate Pass-Through Into Import Prices In Developing Countries: An Homogeneous or Heterogeneous Phenomenon?," Economics Bulletin, AccessEcon, vol. 6(14), pages 1-12.
  15. Stahn, Kerstin, 2009. "Changes in import pricing behaviour: the case of Germany," Discussion Paper Series 1: Economic Studies 2009,14, Deutsche Bundesbank, Research Centre.
  16. Kerstin Stahn, 2007. "Has the Export Pricing Behaviour of German Enterprises Changed? Empirical Evidence from German Sectoral Export Prices," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(3), pages 295-329, June.

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