IDEAS home Printed from https://ideas.repec.org/p/kyu/dpaper/37.html
   My bibliography  Save this paper

Market Share and Exchange Rate Pass-through:Competition among Exporters of the Same Nationality

Author

Listed:
  • Yushi Yoshida

    () (Faculty of Economics, Kyushu Sangyo University)

Abstract

Using a sample from January 1988 to December 2005 for exports of five Japanese major ports to six destination countries, we examine the effect of market share (with respect to competitors from the same country) on exchange rate pass-through (henceforth, ERPT). Our dataset is unique, allowing us to control for market shares among competing exporters with the same nationality. We provide empirical evidence that the effect of market shares on exchange rate pass-through is consistent with the findings of Feenstra et al. (1996), who show a non-linear relationship between market share and exchange rate pass-through. However, our evidence also indicates that the relationship between market share and exchange rate sensitively relies on market characteristics. With regard to recent studies on declining ERPT, our evidence shows that the ERPTs of Japanese exports are relatively stable over the last two decades and any observed changes are of small magnitude. Especially for the U.S., our evidence indicates that Japanese exports do not account for the recent decline in ERPT of U.S. imports.

Suggested Citation

  • Yushi Yoshida, 2009. "Market Share and Exchange Rate Pass-through:Competition among Exporters of the Same Nationality," Discussion Papers 37, Kyushu Sangyo University, Faculty of Economics.
  • Handle: RePEc:kyu:dpaper:37
    as

    Download full text from publisher

    File URL: http://www.ip.kyusan-u.ac.jp/keizai-kiyo/dp37.pdf
    File Function: First version, 2009Nov
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gottfries, Nils, 2002. "Market Shares, Financial Constraints and Pricing Behaviour in the Export Market," Economica, London School of Economics and Political Science, vol. 69(276), pages 583-607, November.
    2. Kasa, Kenneth, 1992. "Adjustment costs and pricing-to-market theory and evidence," Journal of International Economics, Elsevier, vol. 32(1-2), pages 1-30, February.
    3. George Alessandria, 2004. "International Deviations From The Law Of One Price: The Role Of Search Frictions And Market Share," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1263-1291, November.
    4. José Manuel Campa & Linda S. Goldberg, 2005. "Exchange Rate Pass-Through into Import Prices," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 679-690, November.
    5. Bernhofen, Daniel M. & Xu, Peng, 2000. "Exchange rates and market power: evidence from the petrochemical industry," Journal of International Economics, Elsevier, vol. 52(2), pages 283-297, December.
    6. Bouakez, Hafedh & Rebei, Nooman, 2008. "Has exchange rate pass-through really declined? Evidence from Canada," Journal of International Economics, Elsevier, vol. 75(2), pages 249-267, July.
    7. Sushanta Mallick & Helena Marques, 2008. "Passthrough of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalization," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 765-782, September.
    8. Froot, Kenneth A & Klemperer, Paul D, 1989. "Exchange Rate Pass-Through When Market Share Matters," American Economic Review, American Economic Association, vol. 79(4), pages 637-654, September.
    9. Baba, Chikako, 2007. "Price dispersion across and within countries: The case of Japan and Korea," Journal of the Japanese and International Economies, Elsevier, vol. 21(2), pages 237-259, June.
    10. Lourdes Martín & Diego Rodríguez, 2004. "Pricing to market at firm level," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(2), pages 302-320, June.
    11. Feenstra, Robert C. & Gagnon, Joseph E. & Knetter, Michael M., 1996. "Market share and exchange rate pass-through in world automobile trade," Journal of International Economics, Elsevier, vol. 40(1-2), pages 187-207, February.
    12. Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
    13. Robert E. Lipsey & Linda Molinari & Irving B. Kravis, 1991. "Measures of Prices and Price Competitiveness in International Trade in Manufactured Goods," NBER Chapters,in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 144-199 National Bureau of Economic Research, Inc.
    14. Paul R. Bergin & Robert C. Feenstra, 2009. "Pass-Through of Exchange Rates and Competition between Floaters and Fixers," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(s1), pages 35-70, February.
    15. Robert J. Vigfusson & Nathan Sheets & Joseph Gagnon, 2009. "Exchange Rate Passthrough to Export Prices: Assessing Cross-Country Evidence," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 17-33, February.
    16. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, vol. 77(1), pages 93-106, March.
    17. Craig R. Parsons & Kiyotaka Sato, 2008. "New estimates of exchange rate pass-through in Japanese exports An earlier version of this paper was presented at the 10th International Convention of the East Asian Economic Association in Beijing, C," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 13(2), pages 174-183.
    18. Athukorala, Premachandra & Menon, Jayant, 1994. "Pricing to Market Behaviour and Exchange Rate Pass-Through in Japanese Exports," Economic Journal, Royal Economic Society, vol. 104(423), pages 271-281, March.
    19. Otani, Akira & Shiratsuka, Shigenori & Shirota, Toyoichiro, 2003. "The Decline in the Exchange Rate Pass-Through: Evidence from Japanese Import Prices," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 53-81, October.
    20. Sushanta Mallick & Helena Marques, 2008. "Exchange Rate Transmission into Industry-Level Export Prices: A Tale of Two Policy Regimes in India," IMF Staff Papers, Palgrave Macmillan, vol. 55(1), pages 83-108, April.
    21. Aw, Bee Yan & Batra, Geeta & Roberts, Mark J., 2001. "Firm heterogeneity and export-domestic price differentials: A study of Taiwanese electronics products," Journal of International Economics, Elsevier, vol. 54(1), pages 149-169, June.
    22. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Auer, Raphael A. & Schoenle, Raphael S., 2016. "Market structure and exchange rate pass-through," Journal of International Economics, Elsevier, vol. 98(C), pages 60-77.

    More about this item

    Keywords

    Exchange rate pass-through; Local ports; Market share;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:kyu:dpaper:37. 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: (Yoshitsugu Kitazawa). General contact details of provider: http://edirc.repec.org/data/feksujp.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.