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Published in:
1992 | OriginalPaper | Chapter
Comments On: Multinationals and Pricing to Market Behavior
Author : Robert Lawrence
Published in: Multinationals in the New Europe and Global Trade
Publisher: Springer Berlin Heidelberg
Included in: Professional Book Archive
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Knetter uses an ingenious strategy of having period dummies which capture common effects and country dummies which capture institutional effects so that what remains is a coefficient which captures the country specific exchange rate effects of pricing to market. The idea is that the effects of exchange rates on marginal costs have already been controlled through the common factor in the regression so that what remains are the effects of exchange rates that operate via import demand.