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Exchange Rates and Corporate Pricing Strategies

  • Michael M. Knetter
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    This paper reviews the recent literature on pass-through and pricing-to-market. Pricing-to market behavior is estimated for a new, larger data set with 60 German and 20 U.S. 7-digit industries. The results conform closely to what has been found elsewhere in smaller detailed data sets and at higher levels of aggregation. German exporters show more tendency to price-to-market than U.S. exporters for the sample of industries studied, but there is much variation across the industries. Surprisingly, pricing-to-market is more pronounced in German exports of steel and chemicals than in consumer goods.

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    File URL: http://www.nber.org/papers/w4151.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4151.

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    Date of creation: Aug 1992
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    Publication status: published as Amihud, Yakov and Richard M. Lewich (eds.) Exchange Rates and Corporate Performance. New York: Irwin, 1994.
    Handle: RePEc:nbr:nberwo:4151
    Note: IFM ITI
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    Web page: http://www.nber.org
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    1. 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 637-54, September.
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    3. Dixit, Avinash K, 1989. "Hysteresis, Import Penetration, and Exchange Rate Pass-Through," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 205-28, May.
    4. Paul Krugman, 1986. "Pricing to Market when the Exchange Rate Changes," NBER Working Papers 1926, National Bureau of Economic Research, Inc.
    5. Knetter, Michael M, 1989. "Price Discrimination by U.S. and German Exporters," American Economic Review, American Economic Association, vol. 79(1), pages 198-210, March.
    6. Rudiger Dornbusch, 1985. "Exchange Rates and Prices," NBER Working Papers 1769, National Bureau of Economic Research, Inc.
    7. Michael M. Knetter, 1992. "International Comparisons of Pricing-to-Market Behavior," NBER Working Papers 4098, National Bureau of Economic Research, Inc.
    8. Isard, Peter, 1977. "How Far Can We Push the "Law of One Price"?," American Economic Review, American Economic Association, vol. 67(5), pages 942-48, December.
    9. 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.
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    11. Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654 Elsevier.
    12. Robert C. Feenstra, 1987. "Symmetric Pass-Through of Tariffs and Exchange Rates Under Imperfect Competition: An Empirical Test," NBER Working Papers 2453, National Bureau of Economic Research, Inc.
    13. Baldwin, Richard, 1988. "Hyteresis in Import Prices: The Beachhead Effect," American Economic Review, American Economic Association, vol. 78(4), pages 773-85, September.
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    16. Meese, Richard, 1990. "Currency Fluctuations in the Post-Bretton Woods Era," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 117-34, Winter.
    17. Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, vol. 29(3-4), pages 217-236, November.
    18. Baron, David P, 1976. "Fluctuating Exchange Rates and the Pricing of Exports," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 425-38, September.
    19. Feenstra, Robert C, 1988. "Quality Change under Trade Restraints in Japanese Autos," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 131-46, February.
    20. Dunn, Robert M, Jr, 1970. "Flexible Exchange Rates and Oligopoly Pricing: A Study of Canadian Markets," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 140-51, Jan.-Feb..
    21. Kravis, Irving B & Lipsey, Robert E, 1977. "Export Prices and the Transmission of Inflation," American Economic Review, American Economic Association, vol. 67(1), pages 155-63, February.
    22. Klemperer, Paul, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 375-94, May.
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