IDEAS home Printed from https://ideas.repec.org/p/hhs/hastef/0196.html
   My bibliography  Save this paper

Prices, profits and exchange rate uncertainty: The case of Bertrand competition in differentiated goods

Author

Listed:
  • Friberg, Richard

    (Dept. of Economics, Stockholm School of Economics)

Abstract

This paper studies a simple duopoly model of price competition under exchange rate uncertainty with pre-set prices and differentiated goods. Competitors come from different countries and compete in a foreign market. We study the effect of the price setting currency chosen on expected prices, profits and exchange rate exposure as well as equilibrium choice of price setting currency. For a wide range of parameter values price setting in the importer's currency is the dominant strategy. Implications of limited exchange rate pass-through for exchange rate exposure are dicussed. The exchange rate pass-through elasticity is shown to be increasing in own-price effects. Parallels are drawn to the literature on strategic trade policy.

Suggested Citation

  • Friberg, Richard, 1997. "Prices, profits and exchange rate uncertainty: The case of Bertrand competition in differentiated goods," SSE/EFI Working Paper Series in Economics and Finance 196, Stockholm School of Economics, revised 30 Jan 1998.
    • Handle: RePEc:hhs:hastef:0196
    as

    Download full text from publisher

    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.tab.ps.zip
    File Function: tables and figure
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.tab.ps
    File Function: tables and figure
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.tab.pdf.zip
    File Function: tables and figure
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.tab.pdf
    File Function: tables and figure
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.pdf.zip
    File Function: Complete Rendering
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.pdf
    File Function: Complete Rendering
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.ps.zip
    File Function: Complete Rendering
    Download Restriction: no
    File URL: http://swopec.hhs.se/hastef/papers/hastef0196.ps
    File Function: Complete Rendering
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Friberg, Richard & Nydahl, Stefan, 1997. "Openness and the exchange rate exposure of national stock markets - a note," SSE/EFI Working Paper Series in Economics and Finance 195, Stockholm School of Economics.

    More about this item

    Keywords

    Pricing of exports; exchange rate pass-through; exchange rate exposure;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:hastef:0196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Helena Lundin (email available below). General contact details of provider: https://edirc.repec.org/data/erhhsse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.