 Internationalisation and Pricing Behaviour: Some Evidence for AustraliaJames O’Regan and
Jenny Wilkinson
RBA Research Discussion Papers from Reserve Bank of Australia Abstract: Standard trade theory suggests that internationalisation of an economy should lead to increased competitive pressures and an improvement in the efficiency with which domestic goods are produced and priced. We examine a number of ways in which the pricing behaviour of the Australian manufacturing industry has changed over the past couple of decades, and relate this to the substantial opening up of the economy which has occurred. Using disaggregated industry-level data, we find evidence that, when measured in the same currency, prices of Australian-produced goods have fallen relative to foreign-produced goods in many of Australia’s manufacturing industries. We attribute this, in part, to increased international competition driving inefficient domestic producers from the market. We also find, not surprisingly, that domestic price setters tend to be more sensitive to changes in foreign prices in the traded sector than in the non-traded sector, and that the more open the industry the higher the sensitivity to foreign prices. JEL-codes: E31 F40 F41 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp9707 Access Statistics for this paper More papers in RBA Research Discussion Papers from Reserve Bank of Australia Contact information at EDIRC. |
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