Competition and exchange rate pass-through

• Authors: Marko Korhonen , Lauri Vilmi
• Languages of publication: EN

Abstracts

EN

We present a pricing-to-market model, in which the average mark-up depends on the foreign competition. We propose that the exchange rate changes affect the degree of competition and this effect increases exchange rate pass-through to the import prices. We test the implications of our model on 10 OECD countries and provide evidence that competition has an important role for the pricing decisions of firms. On average, the competition effect accounts for over 10 per cent of total exchange rate pass-through.

Keywords

EN

Competition; exchange rate pass-through; mark-up; import price

• Publisher: University Service Publishing, Prague, Czech Republic
• Journal: International Economics Letters
• Year: 2014
• Volume: 3
• Issue: 1
• Pages: 7-15

Contributors

author

Marko Korhonen

author

Lauri Vilmi

• Redakce IEL, Univerzitní servis, s.r.o., Trnkovo nám. 1112/2, 152 00 Praha 5, Czech Republic