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Pricing to market of Italian exporting firms

  • Roberto Basile
  • Sergio de Nardis
  • Alessandro Girardi

This article investigates the pricing-to-market (PTM) behaviour of Italian exporting firms, using quarterly survey data by sector and by region over the period 1999q1 to 2005q2. A partial equilibrium imperfect competition model provides the structure according to which the orthogonality of structural shocks is derived. Impulse response analysis shows non-negligible reactions of export-domestic price margins to unanticipated changes in cost competitiveness and in foreign and domestic demand levels, even though these effects appear to be of a transitory nature. For the period 1999 to 2001, a typical PTM behaviour emerges, while, during the most recent years favourable foreign demand conditions allowed firms to increase their export-domestic price margins in face of a strong deterioration of their cost competitiveness. Macroeconomic implications of the observed PTM behaviour are also discussed.

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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 41 (2009)
Issue (Month): 12 ()
Pages: 1543-1562

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Handle: RePEc:taf:applec:v:41:y:2009:i:12:p:1543-1562
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