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(A)symmetry, (Non)linearity and Hysteresis of Pricing-To-Market: Evidence from German Sugar Confectionery Exports

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  • Fedoseeva Svetlana

    ()
    (Center for International Development and Environmental Research (ZEU), Justus Liebig University, Senckenbergstrasse 3, 35390 Giessen, Germany)

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    Abstract

    Abstract: Pricing-to-market (PTM) is often reported to be adopted by exporters, who have invested in their presence on international markets and are interested in keeping and developing their market shares. Then, a markup adjustment is used to partially offset changes of the exchange rate, which are unfavorable for their foreign customers, in order to keep the price level in the importer’s currency relatively unchanged. With only few exceptions, empirical literature often considers PTM adjustments to be linear and symmetric. If asymmetry is allowed, PTM is often regarded as contemporaneous, which is a very simplifying assumption, given the goals pursued by exporters employing PTM strategies. This paper applies the dynamic autoregressive distributed lag (ADRL) approach popularized by Pesaran, Shin, and Smith (2001) and its nonlinear extension by Shin, Yu, and Greenwood-Nimmo (2011) to the data of German sugar confectionery exports to various destination markets. It turns out that in the long-run PTM is neither linear nor symmetric.

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    Bibliographic Info

    Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

    Volume (Year): 11 (2013)
    Issue (Month): 1 (January)
    Pages: 1-17

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    Handle: RePEc:bpj:bjafio:v:11:y:2013:i:1:p:1-17:n:5

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    References

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    Cited by:
    1. Ansgar Belke & Matthias Göcke & Laura Werner, 2014. "Hysteresis Effects in Economics – Different Methods for Describing Economic Path-dependence," Ruhr Economic Papers 0468, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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