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

  • Yushi Yoshida

    ()

    (Faculty of Economics, Kyushu Sangyo University)

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.

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File URL: http://www.ip.kyusan-u.ac.jp/keizai-kiyo/dp37.pdf
File Function: First version, 2009Nov
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Paper provided by Kyushu Sangyo University, Faculty of Economics in its series Discussion Papers with number 37.

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Length: 33 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:kyu:dpaper:37
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  1. 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.
  2. Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
  3. 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.
  4. Gottfries, Nils, 1999. "Markets Shares, Financial Constraints, and Pricing Behavior in the Export Market," Working Paper Series 1999:15, Uppsala University, Department of Economics.
  5. repec:ltr:wpaper:1992.32 is not listed on IDEAS
  6. 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.
  7. Feenstra, R.C. & Gagnon, J.E. & Knetter, M.M., 1993. "Market Share and Exchange Rate Pass-Through in World Automobile Trade," Papers 93-14, California Davis - Institute of Governmental Affairs.
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  10. 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.
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  17. Prema-chandra Athukorala & Jayant Menon, 1992. "Pricing to Market Behaviour and Exchange Rate Pass-Through in Japanese Exports," Working Papers 1992.32, School of Economics, La Trobe University.
  18. Sushanta Mallick & Helena Marques, 2007. "Pass-through of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalisation," Working Papers 3, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
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  21. 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.
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