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Exchange Rate Pass-Through in an International Duopoly model with Brand Loyalty


  • Chang Byoung-Ky


In many markets, consumers who have previously purchased from one firm have (or perceive) costs of switching to a competitor's product. This study explicitly analyzes, in an international duopoly model with brand loyalty, the effect of rival exchange rate on exchange rate pass-through. In the case of the imperfect foresight, the exchange rate pass-through is affected by the exchange rate uncertainty. Due to the brand loyalty, current price decisions will affect future profits through market shares. The expected future profit is affected by expected competition situations that depend on the interactive movement of future exchange rates. [F31, F12]

Suggested Citation

  • Chang Byoung-Ky, 2001. "Exchange Rate Pass-Through in an International Duopoly model with Brand Loyalty," International Economic Journal, Taylor & Francis Journals, vol. 15(1), pages 41-59.
  • Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:41-59 DOI: 10.1080/10168730100000003

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    References listed on IDEAS

    1. Giovannini, Alberto, 1988. "Exchange rates and traded goods prices," Journal of International Economics, Elsevier, vol. 24(1-2), pages 45-68, February.
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    8. Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
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    10. Athukorala, Premachandra, 1991. "Exchange rate pass-through : The case of Korean exports of manufactures," Economics Letters, Elsevier, vol. 35(1), pages 79-84, January.
    11. Baron, David P, 1976. "Fluctuating Exchange Rates and the Pricing of Exports," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 425-438, September.
    12. Tivig, Thusnelda, 1996. "Exchange rate pass-through in two-period duopoly," International Journal of Industrial Organization, Elsevier, vol. 14(5), pages 631-645, July.
    13. Marquez, Jaime, 1991. "The Dynamics of Uncertainty or the Uncertainty of Dynamics: Stochastic J-Curves," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 125-133, February.
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