Exchange rates and strategic pricing: the case of Swedish machinery exports
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Date
1994-04
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Publisher
Latrobe University
Abstract
This paper examines the impact of exchange rate changes on export pricing behavior through the estimation of export price equations for Swedish exports of machinery and transport equipment and four sub-categories therein. The results support the pricing to market hypothesis that exporters adjust their profit margins in response to exchange rate changes to remain competitive in the world market. Thus, the main conclusion of this study is that no matter how small a country is in terms of its market share. It specialised in a range of products, there is no presumption that it is a price-taker in the world market.
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Keywords
Pricing to market, export pricing, markup model