The 12 reference contexts in paper Andreas M. Fischer, Matthias Lutz, Manueal Wälti (2007) “Who Prices Locally? Survey Evidence of Swiss Exporters” / RePEc:usg:dp2007:2007-39

  1. Start
    3122
    Prefix
    theoretical research in international macroeconomics have shown that our thinking on crucial issues like the desirability of Öxed versus áexible exchange rates can be strongly ináuenced by speciÖc assumptions about the price-setting behavior of Örms.1Traditional empirical research, however, has primarily emphasized country- and sector-speciÖc factors to explain international price discrimination
    Exact
    (Goldberg and Knetter 1997).
    Suffix
    This paper, in contrast, reports on the importance of Örm size. There are several reasons why large exporters are more likely to set different prices in di§erent markets than small exporters.2First, large exporters tend to sell to more markets, whereas small Örms frequently concentrate on a single market or buyer.3The more markets a Örm supplies, the greater is the likelihood that there is at leas
    (check this in PDF content)

  2. Start
    3988
    Prefix
    Third, larger exporting Örms are more likely to bear the transaction costs associated with international price discrimination. Such costs are not usually addressed in the theoretical lit1Obstfeld and Rogo§ (2000),
    Exact
    Engel (2000) and Devereux and Engel (2003)
    Suffix
    are just a few examples. 2These are also linked with Varianís (1989) necessary conditions for price discrimination to be a solution to the Örmís maximization problem: (i) sorting of customers, (ii) prevention of resale, and (iii) the presence of market power. 3Eaton et al. (2004), for instance, show that in a sample of French manufacturing Örms more than a third export to one market only.
    (check this in PDF content)

  3. Start
    4750
    Prefix
    Counting only those Örms that export at all, more than 60% export to one market only. 3 erature, but matter in practice, since international price discrimination requires detailed knowledge of local market conditions. Moreover, by investing in market-speciÖc branding and marketing, Örms can ináuence the degree of market segmentation
    Exact
    (Friberg, 2001),
    Suffix
    which itself is a precondition for price discrimination. Since the investment in both information gathering and segmentation is largely independent of sales volumes and thus more like a Öxed than a variable cost, larger Örms will be more frequently willing to undertake it.4 To test the hypothesis that Örm-speciÖc factors, in particular Örm size, are important determinants of international price di
    (check this in PDF content)

  4. Start
    5913
    Prefix
    The econometric analysis of their responses presented in this paper uses a probit model to regress a binary-choice variable of international price discrimination on Örm size and other control variables. As in the original literature on international price discrimination (e.g.
    Exact
    Krugman 1987),
    Suffix
    we refer to this phe4A related ëstylized factíthat has sometimes been attributed to transaction costs is the positive correlation between Örm size and export intensity (see Avenir Suisse 2005 for evidence on this correlation for Switzerland).
    (check this in PDF content)

  5. Start
    6101
    Prefix
    As in the original literature on international price discrimination (e.g. Krugman 1987), we refer to this phe4A related ëstylized factíthat has sometimes been attributed to transaction costs is the positive correlation between Örm size and export intensity (see
    Exact
    Avenir Suisse 2005
    Suffix
    for evidence on this correlation for Switzerland). Several recent contributions, however, suggest that this relationship may be driven by other Örm-speciÖc factors (see, e.g., Verwaal and Donkers 2002; Wagner 2003 and Kalafsky 2004). 5See Friberg and Wilander (2007) and the studies listed in Fabiani et al. (2007).
    (check this in PDF content)

  6. Start
    6294
    Prefix
    Krugman 1987), we refer to this phe4A related ëstylized factíthat has sometimes been attributed to transaction costs is the positive correlation between Örm size and export intensity (see Avenir Suisse 2005 for evidence on this correlation for Switzerland). Several recent contributions, however, suggest that this relationship may be driven by other Örm-speciÖc factors (see, e.g.,
    Exact
    Verwaal and Donkers 2002; Wagner 2003 and Kalafsky 2004).
    Suffix
    5See Friberg and Wilander (2007) and the studies listed in Fabiani et al. (2007). One exception is L ̧nnemann and Math‰ (2006, Table 5) who show that, in the case of Luxembourg, larger Örms set di§erent prices across countries more frequently than smaller Örms, but this result is not tested econometrically. 4 nomenon as pricing-to-markets (PTM).
    (check this in PDF content)

  7. Start
    6355
    Prefix
    factíthat has sometimes been attributed to transaction costs is the positive correlation between Örm size and export intensity (see Avenir Suisse 2005 for evidence on this correlation for Switzerland). Several recent contributions, however, suggest that this relationship may be driven by other Örm-speciÖc factors (see, e.g., Verwaal and Donkers 2002; Wagner 2003 and Kalafsky 2004). 5See
    Exact
    Friberg and Wilander (2007) and
    Suffix
    the studies listed in Fabiani et al. (2007). One exception is L ̧nnemann and Math‰ (2006, Table 5) who show that, in the case of Luxembourg, larger Örms set di§erent prices across countries more frequently than smaller Örms, but this result is not tested econometrically. 4 nomenon as pricing-to-markets (PTM).
    (check this in PDF content)

  8. Start
    9973
    Prefix
    The survey also asked Örms to indicate in which currrencies they invoiced their customers in their main export market. While the invoicing currency does not necessarily have to correspond to the price-setting currency, empirical evidence suggests that the two are usually the same
    Exact
    (Friberg and Wilander 2006).
    Suffix
    Interestingly, 52% of the Örms in our sample indicated that they used a mix of LCP and PCP in their main export market. Of the rest, 8ëPrices of competitorsíwas also the most important reason for price di§erences in the Euro-area price-setting surveys (Fabiani et al. 2006). 6 28.4% were pure LCP setters and 16.6% pure PCP setters.9Price di§erences across export markets are thus not just limited to
    (check this in PDF content)

  9. Start
    15476
    Prefix
    of the proposition that PTM behavior is less likely within a currency union.15The corresponding results are presented in the 13In other versions of our regression model (not reported here) we also included the share of exports sold the company group (also part of the export pricing suvey) to capture posible di§erences between armís-length transactions and trade within multinational Örms (see
    Exact
    Hellerstein and Villas-Boas 2006)
    Suffix
    However, this variable proved to be insigniÖcant throughout. 14The survey questions related to the Örmsí ímain export marketí only. Nearly 73% percent of industrial Örms in the survey had their main export market in the Euro area. 15Several arguments have been put forth.
    (check this in PDF content)

  10. Start
    17347
    Prefix
    In particular, we Önd a positive relationship between PTM and Örm size using survey evidence on and comparability for consumers. This implies greater arbitrage opportunities and thus reduces a Örmís ability to PTM.
    Exact
    Friberg (2001)
    Suffix
    shows that a common currency lowers the incentive for Örms to invest in the market segmentation necessary for PTM. Devereux et al. (2003) argue that third-country exporters will tend to view a monetary union as a single marketing area and therefore charge a common price.
    (check this in PDF content)

  11. Start
    17476
    Prefix
    This implies greater arbitrage opportunities and thus reduces a Örmís ability to PTM. Friberg (2001) shows that a common currency lowers the incentive for Örms to invest in the market segmentation necessary for PTM.
    Exact
    Devereux et al. (2003)
    Suffix
    argue that third-country exporters will tend to view a monetary union as a single marketing area and therefore charge a common price. Bacchetta and van Wincoop (2005) show that a monetary union will tend to make exporting Örms in these countries invoice in the local currency of a third country. 10 Swiss exporters.
    (check this in PDF content)

  12. Start
    18231
    Prefix
    It is important to note that our evidence on the determinants of PTM should not be generalized to the degree of exchange rate pass-through (EPT). PTM is a necessary pre-condition for incomplete EPT, but not a su¢ cient one
    Exact
    (Goldberg and Knetter 1997).
    Suffix
    However, it is possible that the same determinants apply to both PTM and EPT. If true, and Örm size is also related to the degree of EPT, then di§erences in the distribution of Örm size could be yet another explanation for why EPT appears to both di§er across sectors and markets, and vary over time. 11
    (check this in PDF content)