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Market power and the pricing of commodities imported from developing countries: the case of US vanilla bean imports


  • Rakotoarisoa, Manitra A.
  • Shapouri, Shahla


A declining trend in the prices of vanilla beans reduce export earnings of developing country exporters. At the same time, currencies for these developing countries have depreciated. The 'new' trade theories suggest that market structure plays an important role in relating exchange rate devaluations to price declines. This paper investigates the market structure and estimates the impact of exchange rate movements on prices for vanilla beans imported by the USA from five producers of vanilla beans in developing countries. Unlike other studies, the estimation is based on a 'fixed-effects' econometric model derived from the importer's profit equation and the 'Pricing to Market' (PTM) hypothesis. Data are a pooled cross-section and time series covering the period 1967-1997. The results reveal some evidence that US importers of vanilla beans have the market power to apply price discrimination and to adjust import prices in reaction to exchange rate movement vis-a-vis exporters.© 2001 Elsevier Science B.V. All rights reserved.
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  • Rakotoarisoa, Manitra A. & Shapouri, Shahla, 2001. "Market power and the pricing of commodities imported from developing countries: the case of US vanilla bean imports," Agricultural Economics, Blackwell, vol. 25(2-3), pages 285-294, September.
  • Handle: RePEc:eee:agecon:v:25:y:2001:i:2-3:p:285-294

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    References listed on IDEAS

    1. Jaime de Melo & Marcelo Olarreaga & Wendy Takacs, 2015. "Pricing Policy Under Double Market Power: Madagascar and the International Vanilla Market," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 8, pages 199-218 World Scientific Publishing Co. Pte. Ltd..
    2. Knetter, Michael M, 1989. "Price Discrimination by U.S. and German Exporters," American Economic Review, American Economic Association, vol. 79(1), pages 198-210, March.
    3. 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 637-654, September.
    4. Claessens, S., 1993. "Risk Management in Developing Countries," Papers 235, World Bank - Technical Papers.
    5. Yumkella, K. K. & Unnevehr, L. J. & Garcia, P., 1994. "Noncompetitive Pricing and Exchange Rate Pass-Through in Selected U.S. and Thai Rice Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(02), pages 406-416, December.
    6. Carmen M. Reinhart, 1995. "Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 290-312, June.
    7. Sven W. Arndt & J. David Richardson, 1987. "Real-Financial Linkages Among Open Economies," NBER Working Papers 2230, National Bureau of Economic Research, Inc.
    8. repec:fth:geneec:96.08 is not listed on IDEAS
    9. Eduardo Borensztein & Carmen M. Reinhart, 1994. "The Macroeconomic Determinants of Commodity Prices," IMF Staff Papers, Palgrave Macmillan, vol. 41(2), pages 236-261, June.
    10. Reinhart, Carmen & Borensztein, Eduardo, 1994. "The Macroeconomic Determinants of Commodity Prices," MPRA Paper 6979, University Library of Munich, Germany.
    11. Reinhart, Carmen, 1994. "Devaluation, Relative Prices, and International Trade," MPRA Paper 13708, University Library of Munich, Germany.
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    Cited by:

    1. Maret, Fenohasina, 2007. "Distortions to Agricultural Incentives in Madagascar," Agricultural Distortions Working Paper 48551, World Bank.
    2. Odeh, Oluwarotimi O. & Peterson, Hikaru Hanawa, 2003. "The Impacts Of Market Power And Exchange Rates On Prices Of European Union Soybean Imports.," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35137, Southern Agricultural Economics Association.
    3. Lavoie, Nathalie & Liu, Qihong, 2004. "Findings Of Pricing-To-Market: Market Segmentation Or Product Differentiation?," 2004 Annual meeting, August 1-4, Denver, CO 20287, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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