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Markets Shares, Financial Constraints, and Pricing Behavior in the Export Market

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Author Info
Gottfries, Nils () (Department of Economics)

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Abstract

A parsimonious structural model of price and quantity dynamics is applied to Swedish exports and export prices for manufactured goods 1972-1996. Two sources of dynamics are considered: customer markets and pre-set prices. The dynamic adjustment of exports is very much in line with what the customer market model predicts: the market share adjusts slowly after a change in the relative price. Prices are sticky in the sense that they do not reflect the most recent information about costs and exchange rates. Prices are high when firms are borrowing heavily, supporting the argument in Gottfries (1991) that financial constraints affect pricing behavior.

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Publisher Info
Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 1999:15.

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Length: 32 pages
Date of creation: 10 Sep 1999
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Publication status: Published in Economica, 2002, pages 583-607.
Handle: RePEc:hhs:uunewp:1999_015

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
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Web page: http://www.nek.uu.se/
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Related research
Keywords: exports; market share; customer; export price; price setting; markup; sticky price; financial constraints;

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bhaskar, V & Machin, Stephen & Reid, Gavin C, 1993. "Price and Quantity Adjustment over the Business Cycle: Evidence from Survey Data," Oxford Economic Papers, Oxford University Press, vol. 45(2), pages 257-68, April. [Downloadable!] (restricted)
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  5. Gottfries, Nils & Persson, Torsten, 1988. "Empirical Examinations of the Information Sets of Economic Agents," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 251-59, February. [Downloadable!] (restricted)
  6. Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Blackwell Publishing, vol. 62(4), pages 515-39, October. [Downloadable!] (restricted)
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  8. Froot, Kenneth A & Klemperer, Paul D, 1989. "Exchange Rate Pass-Through When Market Share Matters," American Economic Review, American Economic Association, vol. 79(4), pages 637-54, September. [Downloadable!] (restricted)
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  9. Helen B. Junz & Rudolf R. Rhomberg, 1973. "Price competitiveness in export trade among industrial countries," International Finance Discussion Papers 22, Board of Governors of the Federal Reserve System (U.S.).
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  13. Rodseth, Asbjorn, 1985. " Dynamics of Wages and Trade in a Fixed-Exchange-Rate Economy," Scandinavian Journal of Economics, Blackwell Publishing, vol. 87(1), pages 120-36.
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  15. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1243-1272, September. [Downloadable!] (restricted)
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  16. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, vol. 77(1), pages 93-106, March.
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  17. Alexius, Annika & Vredin, Anders, 1999. " Pricing-to-Market in Swedish Exports," Scandinavian Journal of Economics, Blackwell Publishing, vol. 101(2), pages 223-39, June. [Downloadable!] (restricted)
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  18. Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Blackwell Publishing, vol. 9(2), pages 197-231, June.
  19. Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier. [Downloadable!] (restricted)
  20. Feenstra, Robert C. & Gagnon, Joseph E. & Knetter, Michael M., 1996. "Market share and exchange rate pass-through in world automobile trade," Journal of International Economics, Elsevier, vol. 40(1-2), pages 187-207, February. [Downloadable!] (restricted)
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  21. Gottfries, Nils, 1986. " Price Dynamics of Exporting and Import-Competing Firms," Scandinavian Journal of Economics, Blackwell Publishing, vol. 88(2), pages 417-36.
  22. Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, vol. 29(3-4), pages 217-236, November. [Downloadable!] (restricted)
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    Other versions:
  24. Junz, Helen B & Rhomberg, Rudolf R, 1973. "Price Competitiveness in Export Trade Among Industrial Countries," American Economic Review, American Economic Association, vol. 63(2), pages 412-18, May. [Downloadable!] (restricted)
  25. Paul R. Krugman & Richard E. Baldwin, 1987. "The Persistence of the U.S. Trade Deficit," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-1), pages 1-56. [Downloadable!]
  26. Gottfries, Nils, 1991. "Customer Markets, Credit Market Imperfections and Real Price Rigidity," Economica, London School of Economics and Political Science, vol. 58(231), pages 317-23, August. [Downloadable!] (restricted)
  27. Andersen, Torbert M., 1985. "Price dynamics under imperfect information," Journal of Economic Dynamics and Control, Elsevier, vol. 9(3), pages 339-361, November. [Downloadable!] (restricted)
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  29. Michael Woodford, 1994. "Structural Slumps," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1784-1815, December. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bergvall, Anders, 2000. "Exchange Rate Regimes and Macroeconomic Stability: The Case of Sweden 1972-1996," Working Paper Series 2000:25, Uppsala University, Department of Economics. [Downloadable!]
  2. Vasco Cúrdia & Daria Finocchiaro, 2007. "Monetary regime change and business cycles," Staff Reports 294, Federal Reserve Bank of New York. [Downloadable!]
  3. Lundin, Magnus & Gottfries, Nils & Lindström, Tomas, 2004. "Price and Investment Dynamics: An Empirical Analysis of Plant Level Data," Working Paper Series 2004:7, Uppsala University, Department of Economics. [Downloadable!]
  4. Bergvall, Anders, 2002. "The Stabilizing Properties of Floating Exchange Rates: Some International Evidence," Working Paper Series 2002:14, Uppsala University, Department of Economics. [Downloadable!]
  5. Cúrdia, Vasco & Finocchiaro, Daria, 2005. "An Estimated DSGE Model for Sweden with a Monetary Regime Change," Seminar Papers 740, Stockholm University, Institute for International Economic Studies. [Downloadable!]
  6. Mikael Carlsson & Stefan Eriksson & Nils Gottfries, 2006. "Testing Theories of Job Creation: Does Supply Create Its Own Demand?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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