Skip to main content
Register
Springer Professional
SEARCH
Menu 1 2 3 4
Top

Hint

Swipe to navigate through the chapters of this book

Published in:
Introduction Read chapter Read first chapter

2022 | OriginalPaper | Chapter

8. Asymmetric Exchange Rate Pass-Through, Market Share and Import Pricing

Author : Poornima Varma

Published in: Pulses for Food and Nutritional Security of India

Publisher: Springer Nature Singapore

Login to get access
share
SHARE

Abstract

The current chapter is devoted to examine the role of country-specific market share on exchange rate pass-through and pricing behaviour of major pulses imported to India. The analysis in this chapter shows that the exchange rate pass-through is increasing in market share and after reaching a maximum it declines. The results provide new empirical insights into an inverted U shape relationship between exchange rate pass-through and market share. There have not been many analyses to see the influence of market shares on exchange rate pass-through in the food and agricultural sector. This chapter is making an attempt to analyse the impact of market share on exchange rate pass-through trade by analysing the asymmetric nature of exchange rate pass-through in market share. Our analysis in this chapter also provided empirical evidence for asymmetric exchange rate pass-through in market share. The analysis of long-run exchange rate pass-through is also undertaken in this chapter, and the results provide empirical support for incomplete of partial exchange rate pass-through in the long run as well. The long-run elasticity came out to be significant.
previous chapter Pricing and Exchange Rate Pass-Through in Pulses Imports
next chapter Minimum Support and Price Policies
Footnotes
1
Marazzi et al., (2005) and Aziz et al., (2013).
 
2
Studies generally uses Gross Domestic Product (GDP) of the economy as a proxy to capture the demand for imports (Barhoumi, 2006; Campa and Goldberg, 2005; Gaulier et al., 2008). Since the present study is at a disaggregated level, we use value of output for these crops instead of GDP as a proxy for domestic demand.
 
Literature
Amiti, M., Itskhoki, O., & Konings, J. (2014). Importers, exporters, and exchange rate disconnect. American Economic Review, 104(7), 1942–78.
Athukorala, P. (1991). Exchange rate pass-through: The case of Korean exports of manufactures. Economics Letters, 35(1), 79–84.
Atkeson, A., and Burstein, A. (2008). Pricing-to-market, trade costs, and international relative prices. American Economic Review, 98(5), 1998–2031.
Auer, R. A., and Schoenle, R. S. (2016). Market structure and exchange rate pass-through. Journal of International Economics, 98, 60–77.
Aziz, M. N., Rahman, M. S., Majumder, A., and Sen, S. (2013). Exchange rate pass-through to external and internal prices: A developing country perspective. Journal of Applied Business and Economics, 15(3), 128–143
Barhoumi, K. (2006). Differences in long-run exchange rate pass-through into import prices in developing countries: An empirical investigation. Economic Modelling, 23(6), 926–951.
Berman, N., Martin, P., and Mayer, T. (2012). How do different exporters react to exchange rate changes?. The Quarterly Journal of Economics, 127(1), 437–492.
Brun‐Aguerre, R., Fuertes, A. M., and Greenwood‐Nimmo, M. (2017). Heads I win; tails you lose: asymmetry in exchange rate pass‐through into import prices. Journal of the Royal Statistical Society: Series A (Statistics in Society), 180(2), 587–612
Brun-Aguerre, R., Fuertes, A. M., and Phylaktis, K. (2012). Exchange rate pass-through into import prices revisited: what drives it? Journal of International Money and Finance, 31(4), 818–844.
Bussiere, M. (2013). Exchange rate pass‐through to trade prices: The role of nonlinearities and asymmetries. Oxford Bulletin of Economics and Statistics, 75(5), 731–758.
Byrne, J. P., & Nagayasu, J. (2010). Structural breaks in the real exchange rate and real interest rate relationship. Global Finance Journal, 21(2), 138–151.
Carew, R. (2000). Pricing to market behavior: Evidence from selected Canadian and U.S. agri-food exports. Journal of Agricultural and Resource Economics, 25, 578–595.
Campa, J. M., and Goldberg, L. S. (2005). Exchange rate pass-through into import prices. Review of Economics and Statistics, 87(4), 679-690.
Carew, R., and Florkowski, W. J. (2003). Pricing to market behaviour by Canadian and US agri‐food exporters: Evidence from wheat, pulse, and apples. Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, 51(2), 139–159.
Dawson, P., Gorton, M., Hubbard, C., and Hubbard, L. (2017). Pricing‐To‐Market Analysis: The Case of EU Wheat Exports. Journal of Agricultural Economics, 68(1), 301–315
Devereux, M. B., Dong, W., & Tomlin, B. (2017). Importers and exporters in exchange rate pass-through and currency invoicing. Journal of International Economics, 105, 187–204.
Delatte, A. L., & López-Villavicencio, A. (2012). Asymmetric exchange rate pass-through: Evidence from major countries. Journal of Macroeconomics, 34(3), 833–844.
Falk, M., & Falk, R. (2000). Pricing to market of German exporters: evidence from panel data. Empirica, 27(1), 21–46.
Feenstra, R. C., Gagnon, J. E., and Knetter, M. M. (1996). Market share and exchange rate pass-through in the world automobile trade. Journal of International Economics, 40(1-2), 187–207.
Froot, K. A., and Klemperer, P. (1988). Exchange rate pass-through when market share matters (No. w2542). National Bureau of Economic Research.
Garetto, S. (2016). Firms' heterogeneity, incomplete information, and pass-through. Journal of International Economics, 101, 168–179.
Gafarova, G., Perekhozhuk, O., & Glauben, T. (2015). Price discrimination and pricing-to-market behavior of Black Sea region wheat exporters. Journal of Agricultural and Applied Economics, 47(3), 287–316.
Gaulier, G., Lahrèche-Révil, A., and Méjean, I. (2008). Exchange-Rate Pass-Through at the Product Level. The Canadian Journal of Economics / Revue Canadienne D'Economique, 41(2), 425–449.
Gopinath, G., Itskhoki, O., and Rigobon, R. (2010). Currency choice and exchange rate pass-through. American Economic Review, 100(1), 304–36.
Issar, A., & Varma, P. (2016). Are Indian rice exporters able to price discriminate? Empirical evidence for basmati and non-basmati rice. Applied Economics, 48(60), 5897–5908. CrossRef
Jin, H. J., & Miljkovic, D. (2008). Competitive structure of US grain exporters in the world market: A dynamic panel approach. East Asian Economic Review, 12(1), 33–62. CrossRef
Knetter, M. M. (1989). Price discrimination by US and German exporters. The American Economic Review, 79(1), 198–210.
Knetter, M. M. (1992a). International comparisons of pricing-to-market behaviour. American Economic Review, 83, 473–486.
Knetter, M. M. (1992). International comparisons of pricing-to-market behavior (No. w4098). National Bureau of Economic Research.
Knetter, M. M. (1994). Is export price adjustment asymmetric? evaluating the market share and marketing bottlenecks hypotheses. Journal of International Money and Finance, 13(1), 55–70.
Krugman, P. (1986). Pricing to market when the exchange rate changes (No. w1926). National Bureau of Economic Research.
Krugman, P. (1987). Pricing to market when the exchange rate changes. In S. W. Arndt & J. D. Richardson (Eds.), Real-financial linkages among open economies (pp. 49–70). MIT Press.
Lavoie, N. (2005). Price discrimination in the context of vertical differentiation: An application to Canadian wheat exports. American Journal of Agricultural Economics, 87(4), 835–854. CrossRef
Mallick, S., & Marques, H. (2012). Pricing to market with trade liberalization: The role of market heterogeneity and product differentiation in India’s exports. Journal of International Money and Finance, 31(2), 310–336. CrossRef
Mallick, S., & Marques, H. (2008). Pass-through of the exchange rate and tariffs into import prices of India: currency depreciation versus import liberalization. Review of International Economics, 16(4), 765–782.
Marazzi, M., Sheets, N., Vigfusson, R., Faust, J., Gagnon, J., Marquez, J., and Rogers, J. (2005). Exchange rate pass-through to US import prices: some new evidence. International Finance Discussion Papers, 833.
Marston, R. C. (1990). Pricing to market in Japanese manufacturing. Journal of International Economics, 29(3-4), 217–236.
Menon, J. (1996). The degree and determinants of exchange rate pass-through: market structure, non-tariff barriers, and multinational corporations. The Economic Journal, 106(435), 434–444
Miljkovic, D., Brester, G. W., & Marsh, J. M. (2003). Exchange rate pass-through, price discrimination, and US meat export prices. Applied Economics, 35(6), 641–650. CrossRef
Miljkovic, D., & Zhuang, R. (2011). The exchange rate pass-through into import prices: The case of Japanese meat imports. Applied Economics, 43(26), 3745–3754.
Pall, Z., Perekhozhuk, O., Teuber, R., & Glauben, T. (2013). Are Russian wheat exporters able to price discriminate? Empirical evidence from the last decade. Journal of Agricultural Economics, 64(1), 177–196. CrossRef
Pick, D. H., & Park, T. A. (1991). The competitive structure of US agricultural exports. American Journal of Agricultural Economics, 73(1), 133–141. CrossRef
Reddy, A. A., Bantilan, M. C. S., and Mohan, G. (2012). Enabling Pulses Revolution in India. Policy Brief. Open Access Repository of International Crops Research Institute for Semi-Arid Tropics.
Uhl, K., Perekhozhuk, O., & Glauben, T. (2016). Price discrimination in Russian wheat exports: Evidence from firm‐level data. Journal of Agricultural Economics, 67(3), 722–740.
Varma, P., & Issar, A. (2016). Pricing to market behaviour of India’s high value agri-food exporters: An empirical analysis of major destination markets. Agricultural Economics, 47(1), 129–137. CrossRef
Vergil, H. (2011). Does trade integration affect the asymmetric behavior of export prices? The case of manufacturing exports of Turkey. African Journal of Business Management, 5(23), 9808–9813.
Yumkella, K. K., Unnevehr, L. J., & Garcia, P. (1994). Non-competitive pricing and exchange rate pass-through in selected U.S. and Thai rice markets. Journal of Agricultural and Applied Economics, 26(2), 406–416.
Metadata
Title
Asymmetric Exchange Rate Pass-Through, Market Share and Import Pricing
Author
Poornima Varma
Copyright Year
2022
Publisher
Springer Nature Singapore
Book
Pulses for Food and Nutritional Security of India

Print ISBN: 978-981-19-3184-0

Electronic ISBN: 978-981-19-3185-7

Copyright Year: 2022

DOI
https://doi.org/10.1007/978-981-19-3185-7_8

Premium Partner

Pluta Rombach Rechtsanwälte
    Image Credits