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Export prices and increasing world competition: evidence from French, German, and Italian pricing behavior

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The paper compares the export price strategies of France, Germany and Italy using a large and common pool of manufacturing products and destination markets. Our results suggest that pricing-to-market (PTM) is not widespread among French and German exporters, whereas Italian one do adopt more often such a pricing strategy. The standard claim that product specific characteristics play a major role in determining PTM finds little support in our result, which find almost no regularity across products. On the other hand, the hypothesis of an homogeneous behavior across destination countries (even for the same products) is strongly rejected. This suggests that export price changes are mainly determined by source and destination market characteristics. Something similar applies to profit margins as well: the latter move rather homogeneously across products but differently across destinations. Within this heterogeneity, we find that on average profit margins have either remained stable or augmented in the last three decades, so that increased international integration seems not to have reduced firms market power.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2007-25.

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Date of creation: 2007
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Handle: RePEc:fce:doctra:0725

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  7. Goldberg, Pinelopi Koujianou, 1995. "Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry," Econometrica, Econometric Society, vol. 63(4), pages 891-951, July.
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  13. Adolfson, Malin, 1999. "Swedish Export Price Determination: Pricing to Market Shares?," Working Paper Series in Economics and Finance 306, Stockholm School of Economics.
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  16. André Sapir, 2005. "Un modello obsoleto? Crescita e specializzone dell'economia italiana," ULB Institutional Repository 2013/8122, ULB -- Universite Libre de Bruxelles.
  17. Jose Manuel Campa & Linda S. Goldberg, 2002. "Exchange rate pass-through into import prices: a macro or micro phenomenon?," Staff Reports 149, Federal Reserve Bank of New York.
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