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Who Prices Locally? Survey Evidence of Swiss Exporters

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Author Info
Andreas M. Fischer ()
Matthias Lutz ()
Manueal Wälti ()

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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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Publisher Info
Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2007 with number 2007-39.

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Length: 17 pages
Date of creation: Oct 2007
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Handle: RePEc:usg:dp2007:2007-39

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Related research
Keywords: Pricing to markets local currency pricing firm size

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade

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  2. Michael B. Devereux & Charles Engel, 2003. "Monetary Policy in the Open Economy Revisited: Price Setting and Exchange-Rate Flexibility," Review of Economic Studies, Blackwell Publishing, vol. 70(4), pages 765-783, October. [Downloadable!] (restricted)
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  3. Obstfeld, Maurice & Rogoff, Kenneth, 2000. "New directions for stochastic open economy models," Journal of International Economics, Elsevier, vol. 50(1), pages 117-153, February. [Downloadable!] (restricted)
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  4. Rebecca Hellerstein & Sofia Villas-Boas, 2006. "Arm's-Length Transactions as a Source of Incomplete Cross-Border Transmission: The Case of Autos," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 1016, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
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  5. Patrick Lünnemann & Thomas Y. Mathä, 2006. "New survey evidence on the pricing behaviour of Luxembourg firms," Working Paper Series 617, European Central Bank. [Downloadable!]
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  6. Silvia Fabiani & Martine Druant & Ignacio Hernando & Claudia Kwapil & Bettina Landau & Claire Loupias & Fernando Martins & Thomas Mathä & Roberto Sabbatini & Harald Stahl & Ad Stokman, 2006. "What Firms' Surveys Tell Us about Price-Setting Behavior in the Euro Area," International Journal of Central Banking, International Journal of Central Banking, vol. 2(3), September. [Downloadable!]
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  7. Bacchetta, Philippe & van Wincoop, Eric, 2005. "A theory of the currency denomination of international trade," Journal of International Economics, Elsevier, vol. 67(2), pages 295-319, December. [Downloadable!] (restricted)
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  8. 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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  9. Ernst Verwaal & Bas Donkers, 2002. "Firm Size and Export Intensity: Solving an Empirical Puzzle," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 33(3), pages 603-613, September. [Downloadable!] (restricted)
  10. Engel, Charles, 2000. "Local-currency pricing and the choice of exchange-rate regime," European Economic Review, Elsevier, vol. 44(8), pages 1449-1472, August. [Downloadable!] (restricted)
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  11. Joachim Wagner, 2003. "Unobserved firm heterogeneity and the size-exports nexus: Evidence from German panel data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(1), pages 161-172, March. [Downloadable!] (restricted)
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