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Pricing to market of Italian exporting firms

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  • Roberto Basile
  • Sergio de Nardis
  • Alessandro Girardi

Abstract

This article investigates the pricing-to-market (PTM) behaviour of Italian exporting firms, using quarterly survey data by sector and by region over the period 1999q1 to 2005q2. A partial equilibrium imperfect competition model provides the structure according to which the orthogonality of structural shocks is derived. Impulse response analysis shows non-negligible reactions of export-domestic price margins to unanticipated changes in cost competitiveness and in foreign and domestic demand levels, even though these effects appear to be of a transitory nature. For the period 1999 to 2001, a typical PTM behaviour emerges, while, during the most recent years favourable foreign demand conditions allowed firms to increase their export-domestic price margins in face of a strong deterioration of their cost competitiveness. Macroeconomic implications of the observed PTM behaviour are also discussed.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 41 (2009)
Issue (Month): 12 ()
Pages: 1543-1562

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Handle: RePEc:taf:applec:v:41:y:2009:i:12:p:1543-1562

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Web page: http://www.tandfonline.com/RAEC20

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Web: http://www.tandfonline.com/pricing/journal/RAEC20

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References

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  1. Haskel, Jonathan & Wolf, Holger, 2001. " The Law of One Price--A Case Study," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 545-58, December.
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  16. Robert Feenstra & Paul Bergin, 2003. "Pricing To Market, Staggered Contracts, And Real Exchange Rate Persistence," Working Papers 991, University of California, Davis, Department of Economics.
  17. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
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Citations

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Cited by:
  1. Hélène Erkel-Rousse, 2007. "Business Tendency Surveys: From Short-Term Analysis to Structural Studies," Economie et Statistique, Institut National de la Statistique et des Etudes Economiques, vol. 395, pages 3-11, January.
  2. Georg H. Strasser, 2011. "Exchange Rate Pass-Through and Credit Constraints: Firms Price to Market as Long as They Can," Boston College Working Papers in Economics 788, Boston College Department of Economics, revised 13 Feb 2012.
  3. Borin, Alessandro & Lamieri, Marco, 2007. "Estimating Product Quality in International Trade," MPRA Paper 14678, University Library of Munich, Germany.
  4. Sarah Guillou & Stefano Schiavo, 2007. "Export prices and increasing world competition : evidence from French, German and Italian pricing behavior," Sciences Po publications 2007-25, Sciences Po.
  5. Roberto Basile & Sergio de Nardis & Alessandro Girardi, 2012. "Pricing to market, firm heterogeneity and the role of quality," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(4), pages 595-615, December.
  6. Strasser, Georg, 2013. "Exchange rate pass-through and credit constraints," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 25-38.

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