Pricing in International Markets: Lessons From The Economist / Atish R. Ghosh, Holger C. Wolf.

Format:

Book

Author/Creator:

Ghosh, Atish R.

Contributor:

National Bureau of Economic Research.

Wolf, Holger C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4806.

NBER working paper series no. w4806

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Pricing in International Markets

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Summary:

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.

Notes:

Print version record

July 1994.