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Publication year
Pricing-to-Market, Trade Costs, and International Relative Prices
Resource type
Authors/contributors
- Atkeson, Andrew (Author)
- Burstein, Ariel (Author)
Title
Pricing-to-Market, Trade Costs, and International Relative Prices
Abstract
International relative prices across industrialized countries show large and systematicdeviations from relative purchasing power parity. We embed a model ofimperfect competition and variable markups in a quantitative model of internationaltrade. We find that when our model is parameterized to match salientfeatures of the data on international trade and market structure in the UnitedStates, it can reproduce deviations from relative purchasing power parity similarto those observed in the data because firms choose to price-to-market. Wethen examine how pricing-to-market depends on the presence of internationaltrade costs and various features of market structure. (JEL F12, F14, F31)
Publication
American Economic Review
Volume
98
Issue
5
Pages
1998-2031
Date
2008-12
Citation
Atkeson, A., & Burstein, A. (2008). Pricing-to-Market, Trade Costs, and International Relative Prices. American Economic Review, 98, 1998–2031.
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