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Exchange rate pass-through and strategic pricing: Evidence from Japanese imports of DRAMs

  • Fumiko Takeda

    ()

    (Yokohama City University)

  • Katsumi Matsuura

    ()

    (Yokohama City University)

This paper analyzes oligopolistic rivalry among source countries to evaluate the degree of exchange-rate pass-through. The analysis of Japanese imports of DRAMs also contributes to the study of the pass-through of relatively homogenous goods produced in emerging countries, which has been analyzed in very few papers. Comparison between traditional OLS estimates, which take competitors' pricing behavior as exogenously given, and GMM estimates, which fully endogenize the rivals'' pricing behavior, indicates the misspecification in the OLS estimates and the need to endogenize pricing behavior. The results also show that the degree of pass-through estimated by GMM is lower than that estimated by OLS, and that prices are strategic complements between the following pairs of countries Korea and Taiwan, Taiwan and Singapore, and Singapore and the US.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 6 (2003)
Issue (Month): 8 ()
Pages: 1-13

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Handle: RePEc:ebl:ecbull:eb-03f10001
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  1. Prema-chandra Athukorala, 1990. "Exchange Rate Pass Through: The Case of Korean Exports of Manufacturers," Working Papers 1990.08, School of Economics, La Trobe University.
  2. Robert C. Feenstra & Joseph E. Gagnon & Michael M. Knetter., 1993. "Market share and exchange rate pass-through in world automobile trade," International Finance Discussion Papers 446, Board of Governors of the Federal Reserve System (U.S.).
  3. Rudiger Dornbusch, 1985. "Exchange Rates and Prices," NBER Working Papers 1769, National Bureau of Economic Research, Inc.
  4. Yushi Yoshida & Shinji Takagi, 1999. "Exchange Rate Movements and Tradable Goods Prices in East Asia: An Analysis Basedon Japanese Customs Data, 1988-1998," IMF Working Papers 99/31, International Monetary Fund.
  5. Hung, Wansing & Kim, Yoonbai & Ohno, Kenichi, 1993. "Pricing exports: a cross-country study," Journal of International Money and Finance, Elsevier, vol. 12(1), pages 3-28, February.
  6. Takatoshi Ito & Eiji Ogawa & Yuri Nagataki Sasaki, 1999. "How Did the Dollar Peg Fail in Asia?," NBER Working Papers 6729, National Bureau of Economic Research, Inc.
  7. Dominique M. Gross & Nicolas Schmitt, 1999. "Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation," IMF Working Papers 99/47, International Monetary Fund.
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