Gravity Meets Pricing to Market: What a Combined-Method Approach Tells Us on German Beer Exports and Pricing

Dreyer Heiko (), Svetlana Fedoseeva and Roland Herrmann
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Dreyer Heiko: Institute for Agricultural Policy and Market Research, University of Giessen, Senckenbergstrasse 3, D-35390, Giessen, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2017, vol. 237, issue 4, 295-328

Abstract: Gravity and pricing to market (PTM) models have been used to elaborate determinants of bilateral trade and export pricing for different countries and branches. Typically, only one of the two methods was chosen. We show in a stepwise approach how a combination of both methods can reveal novel results on the determinants of exports and export pricing behaviour. For the case of German beer exports, we show that structural differences exist between markets on which exporters apply either PTM or non-PTM strategies. German beer exporters apply PTM strategies, in particular local-currency stabilization, on those markets where imports are very sensitive to exchange-rate changes. Non-PTM strategies, i. e. full exchange-rate transmission, occur on export markets with insensitive reactions. Apart from PTM strategies, German beer exports are strongly dependent on policy variables such as the introduction of the Euro and the partner country’s membership in the EU.

Keywords: Incomplete pass-through; gravity model; pricing to market; export behaviour; German beer (search for similar items in EconPapers)
JEL-codes: F10 F14 L66 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Journal Article: Gravity Meets Pricing to Market: What a Combined-Method Approach Tells Us on German Beer Exports and Pricing (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:237:y:2017:i:4:p:295-328:n:3

DOI: 10.1515/jbnst-2017-0106

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