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Export Rivalry and Exchange Rate Pass-Through

Puyang Sun, Xinyu Hou and Yong Tan ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we investigate the influence of market rivalry on firm-level exchange rate pass-through. Similar to Bloom et al. (2013), we define market rivalry as product market proximity, and expect the cross market spillovers, i.e., through leaked information or reputation, to affect firm-level export price. Using a dataset from comprehensive Chinese exporters during 2000-2007, we find supporting evidence of this influence. Firms that face a high degree of market rivalry are less responsive to exchange rate fluctuations, which suggests a higher exchange rate pass-through. The influence of market rivalry is stronger on firms that export consumption and heterogeneous products, and to developed countries. Our results are robust to different measures of market rivalry and specifications.

Keywords: Market Rivalry; Exchange Rate Pass-through; Cross Markets Spillovers (search for similar items in EconPapers)
JEL-codes: F14 F31 F33 O19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-tra
Date: 2017-12-20
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