Search

Purpose – Brazil uses the dollar as a vehicle currency to invoice its exports. This fact produces a tendency toward equalizing the prices of products in dollars in the international market and reducing the ability of firms to practice pricing-to-market (PTM). This study aims to evaluate the hypothesis by estimating error correction models in panel data, obtaining estimates of PTM for 25 manufacturing products exported by Brazil between 2010 and 2020. Design/methodology/approach – This study uses the correlated common effect estimator proposed by Pesaran (2006) and Chudik and Pesaran (2015b) to estimate the PTM coefficients. Findings – Results of this study indicate that exporters practice local-currency pricing stability for dollar prices. This study obtains that Brazilian exporters tend to stabilize their dollar price for exports, reducing heterogeneity between destination markets. The results are in agreement with the hypothesis of the prevalence of the coalescing effect of Goldberg and Tille (2008) and lower sensitivity of the markup adjustment to the specific market, as pointed out by Corsetti et al. (2018). The pricing of Brazilian exports in dollars reflects a profit maximization strategy that considers an international price system based on global demand for products. Originality/value – In addition to analyzing the dollar role in the pricing of Brazilian exports through the triangular decomposition, this study also shows the importance of examining the cross-section dependence of errors, considering the heterogeneous cointegration in export pricing models and producing PTM estimates for short-term and long-term.

Russia emerged as an important wheat exporter in recent years raising the question of how this will affect international wheat markets. In particular developing countries - the main destination of Russian wheat exports - could be harmed by aggressive pricing behaviour. This article analyses the exertion of price discrimination by Russian wheat exporting firms based on Krugman's pricing-to-market hypothesis. We apply Knetter's panel model to a firm-level dataset and find evidence for price-discriminating behaviour by Russian firms in 25 out of 61 destination countries over the period 2002-2011. [ABSTRACT FROM AUTHOR]

The conventional estimation method of the pricing-to-market (the PTM) model in the international trade literature is a within model of panel regression of export prices on exchange rates with time and country dummies. Previous studies have found a significant coefficient parameter in exchange rate variable, which is only indicative of short-run pricing-to-market for multiple export destinations rather than long-run pricing behavior. This paper examines a long- run pricing-to-market for U.S. broiler meat export markets, using "between" panel specification. Findings indicate that the U.S. pricing-to-market behavior of exporters is both transient and persistently long. These results clearly imply that the implementation of a long-run pricing-to-market strategy in the U.S. broiler meat exports mitigates the rising imbalance between the domestic production and consumption via incomplete exchange rate pass-through. [ABSTRACT FROM AUTHOR]

Studies on the relationship between exchange rates and traded goods prices typically find evidence of incomplete pass-through, usually explained by pricing-to-market behaviour. Although economic theory predicts that incomplete pass-through may also be linked to the presence of non-tariff barriers to trade, variables reflecting such a link is rarely included in empirical models. In this paper, we estimate a pricing-to-market model for Norwegian import prices on textiles and wearing apparels, controlling for non-tariff barriers to trade and shift in imports from high- to low-cost countries. We apply the cointegrated VAR approach and develop measures of foreign prices based on superlative price indices (including the Törnqvist and Fischer price indices) and a data calibration method necessary to approximate relative price levels across countries. Our measures of foreign prices thereby account for inflationary differences and varying import shares and price level differences (known as the China effect) among trading partners. We show that these measures of foreign prices, unlike standard measures used in the pricing-to-market literature, are likely to produce unbiased estimates of pass-through. Once the China effect is controlled for, we find little evidence that pass-through has changed alongside trade liberalisation. [ABSTRACT FROM AUTHOR]

This article aims at showing heterogeneity in the degree of exchange rate pass-through to import prices in major advanced economies at three different levels: (1) across destination markets; (2) across types of exporters [distinguishing developed economy (DE) from emerging economy (EE) exporters] and (3) over time. Based on monthly data over the period 1991-2007, the results show first that large destination markets exhibit the lowest degree of pass-through. The degree of pass-through for goods imported from EEs is also significantly lower than for those from DEs. Regarding the evolution over time, no clear change in pricing behaviours can be identified and the well-identified decline in the exchange rate pass-through between the 1980s and 1990s appears to have stopped during the period considered. [ABSTRACT FROM AUTHOR]

Abstract: Pricing-to-market (PTM) is often reported to be adopted by exporters, who have invested in their presence on international markets and are interested in keeping and developing their market shares. Then, a markup adjustment is used to partially offset changes of the exchange rate, which are unfavorable for their foreign customers, in order to keep the price level in the importer's currency relatively unchanged. With only few exceptions, empirical literature often considers PTM adjustments to be linear and symmetric. If asymmetry is allowed, PTM is often regarded as contemporaneous, which is a very simplifying assumption, given the goals pursued by exporters employing PTM strategies. This paper applies the dynamic autoregressive distributed lag (ADRL) approach popularized by and its nonlinear extension by to the data of German sugar confectionery exports to various destination markets. It turns out that in the long-run PTM is neither linear nor symmetric. [ABSTRACT FROM AUTHOR]

Using product level U.S. export data from 1989 to 2001, there is evidence that U.S. exporters price discriminate across markets. Variation in the quality of the products is one reason for the observed price differentiation. U.S. exporters also price discriminate based on transaction costs. Finally, U.S. exporters practice pricing-to-market and this pricing strategy is another source of the variations in U.S. export prices. Some of these conclusions though are weakened when export prices toward the center of the price distribution are considered. [ABSTRACT FROM AUTHOR]

We employ a vertical differentiation model to examine the potential bias in pricing-to-market results when using export unit values aggregating differentiated products. Our results show that: (i) false evidence of pricing-to-market is always found when using unit values, whether the law of one price holds or not; and (ii) the size of the bias increases with the level of product differentiation. Our simulation results support those conceptual findings. Thus, some of the positive pricing-to-market results in the literature could be an artifact of the product heterogeneity embodied in unit values rather than evidence of imperfect competition. [ABSTRACT FROM AUTHOR]