Who Prices Locally? Survey Evidence of Swiss Exporters

November 1, 2007
Issue 2007-16

Summary

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 dif- ferent 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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Issue:
16
Pages:
19
JEL classification:
F10, F14
Keywords:
Pricing to markets, local currency pricing, firm size
Year:
2007

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Author(s)

  • Andreas M. Fischer

  • Prof. Dr. Matthias Lutz

  • Dr. Manuel Wälti

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