Price competitiveness and pricing to market in Taiwan.
Item
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Title
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Price competitiveness and pricing to market in Taiwan.
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Identifier
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AAI9521314
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identifier
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9521314
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Creator
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Shen, Kang.
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Contributor
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Adviser: Robert E. Lipsey
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Date
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1995
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Language
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English
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Publisher
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City University of New York.
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Subject
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Economics, General | Economics, Commerce-Business | History, Asia, Australia and Oceania
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Abstract
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This paper develops models of exchange rate pass-through and pricing to market for small open economics, that allow for imperfect competition in markets for traded goods. It applied these models to Taiwan and shows that Taiwanese firms more likely act either as Bertrand competitors with capacity constraints or as price takers in their export markets. The paper also investigates exchange rate pass-through and pricing by Taiwanese firms in export and domestic markets. The paper reports equations explaining exchange rate pass-through and the margin between export price and domestic price for a wide range of commodities in Taiwan. Empirical evidence shows (1) partial exchange rate pass-through does not necessarily mean pricing to market. (2) Taiwanese firms respond to changes in real exchange rates by pricing to market, varying their export price in the NT dollar relative to their domestic prices. (3) Real wage rates and real incomes play important roles in pricing. That is indicated by increases in domestic prices relative to export prices, due to higher growth rates of real wages and real incomes in Taiwan than in its major trade partners. The results suggest that Taiwanese firms are losing their comparative advantage in many traditional products owing to rapid increases in labor costs and exchange rate appreciations in 1986-92.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
