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

Author

Listed:
  • Fumiko Takeda

    (Yokohama City University)

  • Katsumi Matsuura

    (Yokohama City University)

Abstract

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.

Suggested Citation

  • Fumiko Takeda & Katsumi Matsuura, 2003. "Exchange rate pass-through and strategic pricing: Evidence from Japanese imports of DRAMs," Economics Bulletin, AccessEcon, vol. 6(8), pages 1-13.
    • Handle: RePEc:ebl:ecbull:eb-03f10001
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Exchange rate pass-through Oligopoly International trade;

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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