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Gravity Meets Pricing to Market: What a Combined-Method Approach Tells Us on German Beer Exports and Pricing

Author

Listed:
  • Dreyer Heiko
  • Fedoseeva Svetlana
  • Herrmann Roland

    (Institute for Agricultural Policy and Market Research, University of Giessen, Senckenbergstrasse 3, D-35390, Giessen, Germany)

Abstract

Gravity and pricing to market (PTM) models have been used to elaborate determinants of bilateral trade and export pricing for different countries and branches. Typically, only one of the two methods was chosen. We show in a stepwise approach how a combination of both methods can reveal novel results on the determinants of exports and export pricing behaviour. For the case of German beer exports, we show that structural differences exist between markets on which exporters apply either PTM or non-PTM strategies. German beer exporters apply PTM strategies, in particular local-currency stabilization, on those markets where imports are very sensitive to exchange-rate changes. Non-PTM strategies, i. e. full exchange-rate transmission, occur on export markets with insensitive reactions. Apart from PTM strategies, German beer exports are strongly dependent on policy variables such as the introduction of the Euro and the partner country’s membership in the EU.

Suggested Citation

  • Dreyer Heiko & Fedoseeva Svetlana & Herrmann Roland, 2017. "Gravity Meets Pricing to Market: What a Combined-Method Approach Tells Us on German Beer Exports and Pricing," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 237(4), pages 295-328, August.
    • Handle: RePEc:jns:jbstat:v:237:y:2017:i:4:p:295-328:n:9
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    Cited by:

    1. Maria Mercè Clop-Gallart & María Isabel Juárez & Montserrat Viladrich-Grau, 2021. "Has the euro been fattening the European pig meat trade?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(12), pages 500-510.
    2. Eva Bieleková & Ján Pokrivčák, 2020. "Determinants of International Beer Export," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 12(2), June.

    More about this item

    Keywords

    Incomplete pass-through; gravity model; pricing to market; export behaviour; German beer;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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