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Who Prices Locally? Survey Evidence of Swiss Exporters

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  • Fischer, Andreas M
  • Lutz, Matthias
  • Wälti, Manuel

Abstract

Survey information on Swiss exporters is used to test the hypothesis that firm-specific factors, in particular firm size, are important determinants of pricing--to-market (PTM). The survey asked exporters whether they set different prices across markets and, if so, whether price segmentation occurred because of pricing conditions in the local market or other factors. The empirical analysis is based on a probit model that regresses a binary-choice variable of PTM on firm size and other control variables. The main empirical finding is that firm size and PTM are positively and significantly correlated. A further result is that while firms whose main export market is in the Euro area are less likely to engage in PTM, firm size plays a bigger role for them. These results are robust across different PTM classifications, regression specifications, export destinations, and industrial sectors.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6442.

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Date of creation: Sep 2007
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Handle: RePEc:cpr:ceprdp:6442

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Keywords: firm size; local currency pricing; Pricing to markets;

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References

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Cited by:
  1. Ligthart, J.E. & Werner, S.E.V., 2010. "Has the Euro Affected the Choice of Invoicing Currency?," Discussion Paper 2010-48, Tilburg University, Center for Economic Research.
  2. Daniel Kaufmann, 2008. "Price-Setting Behaviour in Switzerland Evidence from CPI Micro Data," Working Papers 2008-15, Swiss National Bank.
  3. Andrea Lassmann, 2013. "Exchange Rate Transmission and Export Activity at the Firm Level," KOF Working papers 13-331, KOF Swiss Economic Institute, ETH Zurich.

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