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Markups and export-pricing strategies

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  • Joakim Gullstrand
  • Karin Olofsdotter
  • Susanna Thede

Abstract

We analyze empirically export-price strategies across export destinations using detailed firm-product data. Most recent studies using disaggregated data to investigate why firms charge different prices for the same product on different markets focus on the cost component of prices and neglect the markup component. In this paper, we concentrate on the markup component and examine how variations in firms’ export prices may reflect price discrimination by comparing the markup of firms with different pricing strategies. We make use of detailed firm-level data for exporting firms in the Swedish food sector consisting of both manufacturing and intermediary trading firms. The paper documents the export-price variations within the two sub-sectors and explores how different price strategies correlate with markups. The results offer new information beyond the fact that exporters tend to have a higher markup. In particular, we find that firms in the food-processing sector with a greater ability to discriminate across markets mark their products up even more. This result points to the importance of underlying firm decisions in order to explain differences in export premiums across firms. In addition, the results reveal that markups are a complex function of firm and destination characteristics, and that the relationship between markups and pricing strategies in the manufacturing sector is not necessarily observed in other sectors of the supply chain. Copyright Kiel Institute 2014

Suggested Citation

  • Joakim Gullstrand & Karin Olofsdotter & Susanna Thede, 2014. "Markups and export-pricing strategies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 221-239, May.
    • Handle: RePEc:spr:weltar:v:150:y:2014:i:2:p:221-239
    DOI: 10.1007/s10290-013-0178-x
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    Cited by:

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    2. Matthias Göcke & Svetlana Fedoseeva, 2016. "Optimal Monopolist Export Pricing with Dynamic Demand and Learning Curve Effects," Open Economies Review, Springer, vol. 27(3), pages 447-469, July.
    3. Bastos, Paulo & Silva, Joana, 2010. "The quality of a firm's exports: Where you export to matters," Journal of International Economics, Elsevier, vol. 82(2), pages 99-111, November.
    4. Dela-Dem Doe, 2023. "Distance to destination and export price variation within agri-food firms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 563-590.
    5. Freire Junior, Clovis, 2017. "Economic diversification: Explaining the pattern of diversification in the global economy and its implications for fostering diversification in poorer countries," MERIT Working Papers 2017-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Michael Neubert, 2017. "International Pricing Strategies for Born-Global Firms," Central European Business Review, Prague University of Economics and Business, vol. 2017(3), pages 41-50.
    7. Sofia Anyfantaki & Sarantis Kalyvitis & Margarita Katsimi & Eirini Thomaidou, 2018. "Export pricing at the firm level with panel data," Working Papers 241, Bank of Greece.

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    More about this item

    Keywords

    Export prices; Price discrimination; Markups; D40; F12; F14;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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