Incomplete exchange-rate pass-through and imperfect competition: The effect of local production
The effects of changes in prices as a result of changes in production costs due to exchange-rate fluctuations are examined using a model that utilizes data taken from the US automobile market. The 'pricing to market' phenomenon is also studied to determine possible imperfections in trade. Results show that Japanese carmakers pass increase in production costs to US buyers. Moreover, carmakers with production plants in both US and Japan pass only a small part of cost increases compared to carmakers that manufacture in a single location.
Publication Name: American Economic Review
Price-matching policies and entry
Research was conducted to examine the effects of the use of price-matching policies on entry decisions in a spatial free-entry model. The objective was to prove that, in a spatial free-entry model, the impact of a price-matching policy are an increase in the number of sellers, a decrease in consumer surplus and social welfare and an increase in prices. Results suggest that in a price-matching equilibrium, an increase in the number of firms entering the market leads to a rise in prices.
Publication Name: Bulletin of Economic Research
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