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Exporters' Pricing Strategies: the Case of Italy


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  • Bugamelli Matteo
  • Tedeschi Roberto


Using Italian data over the period 1990-99, this paper estimates an export pricing equation along the lines traced in the Pricing-to-Market literature on exchange rate pass-through (ERPT). As compared to previous papers, we minimize aggregation and selection biases, by focusing on all destination markets (about 70) and all finely disaggregated products (700, according to the 4-digits of SITC). The results show a lot of heterogeneity. On average, ERPT is largely asymmetric: Italian exporters do not cut their profit margins and thus do not defend their market shares when the lira appreciates; they instead raise prices by about 30 per cent of the exchange variation after a lira depreciation. Distinguishing by markets and products, it emerges an incomplete ERPT in industrial markets and in the case of goods produced in "oligopolistic" industries (e.g., economies of scale, high-tech). The same occurs in those sectors where firms are on average larger and the evolution of productivity more favourable. In the traditional sectors (textile, clothing, shoes, etc.), and in the developing countries, where Italian presence is more fragmented, ERPT is almost complete and symmetric: this result may be due to entry-exit of small firms in those markets.

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Bibliographic Info

Article provided by Società editrice il Mulino in its journal Politica economica.

Volume (Year): (2007)
Issue (Month): 3 ()
Pages: 321

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Handle: RePEc:mul:je8794:doi:10.1429/25713:y:2007:i:3:p:321

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Keywords: exchange rate pass-through; pricing-to-market; market structure.;


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Cited by:
  1. Matteo Bugamelli & Alfonso Rosolia, 2006. "Productivity and foreign competition," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 578, Bank of Italy, Economic Research and International Relations Area.
  2. Borin, Alessandro & Lamieri, Marco, 2007. "Estimating Product Quality in International Trade," MPRA Paper 14678, University Library of Munich, Germany.
  3. Roberto Basile & Sergio de Nardis & Alessandro Girardi, 2009. "Pricing to market of Italian exporting firms," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(12), pages 1543-1562.
  4. Domenica Tropeano, 2011. "Income distribution, growth and financialization: the Italian case," Working Papers, Macerata University, Department of Finance and Economic Sciences 65-2011, Macerata University, Department of Finance and Economic Sciences, revised Apr 2011.


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