SSE/EFI Working Paper Series in Economics and Finance
On the Role of Pricing Exports in a Third Currency
Abstract: The share of Swedish exports that are invoiced in U.S.
dollars has doubled comparing a sample from 1968 with figures from 1993.
There has been no corresponding increase in Swedish trade with the United
States. This serves as motivation for our interest in price
setting/invoicing in a third currency. We investigate the role of pricing
in the importers', exporter's or a third currency in a simple model with
pre-set prices. The firm of study is a risk neutral monopolist exporter who
faces a linear demand curbe. Expected prices, quantities and profits depend
on the price setting currency chosen. Also the curvature of realised
profits as a function of exchange rate surprises depends on the price
setting currency chosen. In an extension we discuss the role of competition
from a third country in a model of Bertrand competition in differentiated
Keywords: Invoicing; exchange rate fluctuations; pricing of exports; (follow links to similar papers)
JEL-Codes: F14; F23; (follow links to similar papers)
35 pages, September 1996
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
hastef0128.ps PostScript file (606kB)
hastef0128.ps.zip PKZipped PostScript (165kB)
hastef0128.pdf.zip (zipped) (110kB)
- This paper is forthcoming as:
Friberg, Richard, 'In which currency should exporters set their prices', Journal of International Economics.
Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom