Price Commitment vs. Flexibility: The Role of Exchange Rate Uncertainty and Its Implications for Exchange Rate Pass-Through
This paper investigates the incentives to commit price or retain price flexibility in a model in which exporting firms face different degrees of exchange rate uncertainty. The result shows that introducing exchange rate uncertainty can lead to the endogenous emergence of an unique leader-follower equilibrium; which firm emerges as price leader depends on the substitutability of products, the magnitude of exchange rate uncertainty and the cost structure. Our study may provide one explanation as to why some exporters set price before the realization of the nominal exchange rates (ï¾“sticky priceï¾”). The results imply exchange rate variability affects exchange rate pass-through.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||01 Sep 2003|
|Date of revision:|
|Publication status:||Published in Review of International Economics, September 2003, vol. 11 no. 4, pp. 679-711|
|Contact details of provider:|| Postal: |
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:isu:genres:5252. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Curtis Balmer)
If references are entirely missing, you can add them using this form.