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Fumiko Takeda and Katsumi Matsuura
''Exchange rate pass-through and strategic pricing: Evidence from Japanese imports of DRAMs''
( 2003, Vol. 6 No.8 )
This paper analyzes oligopolistic rivalry among source countries to evaluate the degree of exchange-rate pass-through. The analysis of Japanese imports of DRAMs also contributes to the study of the pass-through of relatively homogenous goods produced in emerging countries, which has been analyzed in very few papers. Comparison between traditional OLS estimates, which take competitors' pricing behavior as exogenously given, and GMM estimates, which fully endogenize the rivals'' pricing behavior, indicates the misspecification in the OLS estimates and the need to endogenize pricing behavior. The results also show that the degree of pass-through estimated by GMM is lower than that estimated by OLS, and that prices are strategic complements between the following pairs of countries Korea and Taiwan, Taiwan and Singapore, and Singapore and the US.
Keywords: Exchange rate pass-through Oligopoly International trade
JEL: F1 - Trade: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Jul 20 2003 Manuscript Accepted : Jul 31 2003

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