Working Paper: CEPR ID: DP6442
Authors: Andreas M. Fischer; Matthias Lutz; Manuel Wlti
Abstract: Survey information on Swiss exporters is used to test the hypothesis that firm-specific factors, in particular firm size, are important determinants of pricing--to-market (PTM). The survey asked exporters whether they set different prices across markets and, if so, whether price segmentation occurred because of pricing conditions in the local market or other factors. The empirical analysis is based on a probit model that regresses a binary-choice variable of PTM on firm size and other control variables. The main empirical finding is that firm size and PTM are positively and significantly correlated. A further result is that while firms whose main export market is in the Euro area are less likely to engage in PTM, firm size plays a bigger role for them. These results are robust across different PTM classifications, regression specifications, export destinations, and industrial sectors.
Keywords: firm size; local currency pricing; pricing to markets
JEL Codes: F10; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | pricing to market (PTM) (D41) |
| firm size (L25) | likelihood of engaging in PTM (D91) |
| export market in euro area (F10) | likelihood of engaging in PTM (D91) |
| firm size (L25) | pricing to market (PTM) for firms in euro area (L11) |