Discussion Paper Details

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Title: Who Prices Locally? Survey Evidence of Swiss Exporters

Author(s): Andreas M Fischer, Matthias Lutz and Manuel Wälti

Publication Date: September 2007

Keyword(s): firm size, local currency pricing and Pricing to markets

Programme Area(s): International Macroeconomics

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.

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Bibliographic Reference

Fischer, A, Lutz, M and Wälti, M. 2007. 'Who Prices Locally? Survey Evidence of Swiss Exporters'. London, Centre for Economic Policy Research.