Pricing to market behavior in oligopolistic competitio: a microeconometric approach
- Autores: Jacint Balaguer, José Ramón Uriel, Vicente Orts Ríos
- Localización: Working papers = Documentos de trabajo: Serie EC - (Instituto Valenciano de Investigaciones Económicas), Nº. 6, 2003, 14 págs.
- Idioma: inglés
- Enlaces
-
Resumen
This paper takes into account the presence of oligopolistic rivalry between exporters to evaluate their pricing to market behavior. We specify the pricing policy as a simultaneous equation model, which captures the effects of possible interactions in multiple destination markets. The use of information related to multiple transactions helps to alleviate the cost measurement problem found in the typical analyses on prices and exchange rates. Furthermore, the exogenous variations of the exporters' exchange rate vis-à-vis the currency of each destination market will enable us to identify the reaction functions. The empirical approach is applied to the European ceramic tiles industry, where Italian and Spanish exporters compete. Prices are strategic complements and the markup adjustments, caused directly by exchange rate variations, are amplified by the feedback effects on rival's prices.
