The invoicing currency choice model of export enterprises assuming joint utility maximization and analysis of the factors influencing selection

Xiangning Wang and Xing Zhao

Economic Modelling, 2014, vol. 42, issue C, 38-42

Abstract: Based on the assumption of joint utility maximization, an exporting currency unit pricing model was established, which consists of the local currency, producer's currency, and vehicle currency. Furthermore, Monte Carlo simulation and partial least squares (PLS) regression were used to analyze currency weights. Results suggest that when a producer's currency is devalued relative to a local currency, if the demand elasticity of the importer is large, the local currency will primarily be used; if the bargaining power of the importer is strong, the producer's currency will primarily be used. Among these factors, the bargaining power of the exporter has the greatest influence, followed by the demand elasticity of the importer and the exporting country's exchange rate.

Keywords: Invoicing choice model; Currency unit pricing; Monte Carlo simulation; PLS-regression (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:42:y:2014:i:c:p:38-42

DOI: 10.1016/j.econmod.2014.06.001

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