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Integrating Marginal Cost into Pricing-to-market Models for U.S. Agricultural Products

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  • Saghaian, Sayed H.
  • Reed, Michael R.

Abstract

This article investigates the markup pricing behaviour of U.S. exporters of agricultural products. Agricultural products studied are feed, flour, frozen potatoes, frozen orange juice, five categories of beef, five categories of pork, and two categories of chicken. The popular pricing-to-market (PTM) approach of Krugman (1987) is used to examine market power and imperfect competition for the markets under study. The PTM model can directly investigate whether there is any evidence of market power in international trade.The sensitivity of U.S. export prices to exchange rate fluctuations may indicate price discrimination and imperfect competition in the international markets. The PTM approach is popular because of its relatively simple specification and empirical testing.

Suggested Citation

  • Saghaian, Sayed H. & Reed, Michael R., 2004. "Integrating Marginal Cost into Pricing-to-market Models for U.S. Agricultural Products," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 5, pages 1-17, July.
    • Handle: RePEc:ags:cafric:45984
    DOI: 10.22004/ag.econ.45984
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    References listed on IDEAS

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    1. Kasa, Kenneth, 1992. "Adjustment costs and pricing-to-market theory and evidence," Journal of International Economics, Elsevier, vol. 32(1-2), pages 1-30, February.
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    5. Daniel H. Pick & Colin A. Carter, 1994. "Pricing to Market with Transactions Denominated in a Common Currency," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(1), pages 55-60.
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    8. Glauben Thomas & Loy Jens-Peter, 2002. "Pricing-to-Market versus Residual Demand Elasticity Analysis of Imperfect Competition in Food Exports: Evidence from Germany," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-21, October.
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    Cited by:

    1. Balogh, J.M., 2018. "Analyzing the pricing to market behavior of the New World on EU wine market," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276995, International Association of Agricultural Economists.
    2. Zhang, Qiang & Reed, Michael R. & Saghaian, Sayed H., 2007. "Export Market Pricing Decisions and Market Power in World Grain Markets: A Duopoly Model for Soybeans," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34949, Southern Agricultural Economics Association.
    3. Imre Ferto & Jeremias Mate Balogh, 2016. "Are the major European wine exporters able to price discriminate across their EU extra wine export destinations?," CERS-IE WORKING PAPERS 1624, Institute of Economics, Centre for Economic and Regional Studies.

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