Price Discrimination by U.S. and German Exporters

摘要: The insensitivity of the U.S. trade balance to sharp depreciation dollar in past three years has revived interest relationship between exchange rates and balance. A central issue most analyses relation current account rate concerns price adjustment process.' simple integrated, competitive market model predicts that local currency prices should change proportion nominal for a country too small influence world prices. import been referred as "pass-through" empirical literature international economics. If proportional holds, pass-through is said be complete. Accounts recent experience cite failure imported goods rise (i.e., incomplete pass-through) an important factor explaining persistence deficit. Unfortunately, observations on alone provide limited insight into behavior markets, since consistent with at least two fundamentally different paradigms. One standard which law one but fluctuations are associated large changes demand due other factors. For example, if appreciation correlated increases industry marginal cost increasing, then will less than imperfectly exporters capable discriminating across destination phenomenon. Paul Krugman (1987) labeled "pricing market." In this typically markup over exports.2 These markups believed countryspecific; they do not reflect export destinations. Both models plausible explanations experience. it impossible distinguish these competing using only information single country. order models, analysis must measuring either or cost. Either tasks poses formidable problems. Much industrial organization concerned precisely issues, measure competitiveness industries.