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How continuing exporters set the price? Theory and empirical evidence from China

Yong Tan, Faqin Lin and Cui Hu

International Review of Economics & Finance, 2016, vol. 44, issue C, 91-102

Abstract: In this paper, we build a dynamic game model of quantity competition to explain the price difference between continuing exporters and exits. Continuing exports are forward looking and set a lower price at current stage to crowd out the competitors to maximize their overall expected profit. Using a large sample of matched panel data of Chinese firms, we find that after controlling the most important determinants of export price and the firm-year-specific effects, continuing exporters charge a price 39.2%–41.6% lower than the price level charged by future exits in China.

Keywords: Export prices; Dynamic game; Quantity competition (search for similar items in EconPapers)
JEL-codes: C73 F10 (search for similar items in EconPapers)
Date: 2016
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:reveco:v:44:y:2016:i:c:p:91-102

DOI: 10.1016/j.iref.2016.03.009

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