Pricing in International Markets: Lessons From The Economist /
Ghosh, Atish R.
Pricing in International Markets: Lessons From The Economist / Atish R. Ghosh, Holger C. Wolf. - Cambridge, Mass. National Bureau of Economic Research 1994. - 1 online resource: illustrations (black and white); - NBER working paper series no. w4806 . - Working Paper Series (National Bureau of Economic Research) no. w4806. .
July 1994.
Export firms are often assumed to stabilize destination market prices in the face of nominal exchange rate changes in order to protect market share. We show that standard tests of such pricing to market fail to discriminate against the alternative hypothesis of menu costs. As a case study, we examine the characteristics and determinants of changes in the cover prices of The Economist magazine in a sample of twelve countries over the floating rate period. We find that, while the law of one price fails, there is no evidence of systematic attempts to offset nominal exchange rate movements. Instead, the findings are consistent with menu cost driven pricing behavior.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Pricing in International Markets: Lessons From The Economist / Atish R. Ghosh, Holger C. Wolf. - Cambridge, Mass. National Bureau of Economic Research 1994. - 1 online resource: illustrations (black and white); - NBER working paper series no. w4806 . - Working Paper Series (National Bureau of Economic Research) no. w4806. .
July 1994.
Export firms are often assumed to stabilize destination market prices in the face of nominal exchange rate changes in order to protect market share. We show that standard tests of such pricing to market fail to discriminate against the alternative hypothesis of menu costs. As a case study, we examine the characteristics and determinants of changes in the cover prices of The Economist magazine in a sample of twelve countries over the floating rate period. We find that, while the law of one price fails, there is no evidence of systematic attempts to offset nominal exchange rate movements. Instead, the findings are consistent with menu cost driven pricing behavior.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.