英文摘要 |
This study empirically investigates the pricing to market behavior of Taiwan’s woven fabric of synthetic fiber exports to 5 major foreign markets, including the U.S., China, Hong Kong, Indonesia, and Vietnam. Pricing to market refers to adjustment of exporter’s markup to exchange rate movements, thus depending on degree of competition facing exporters in any particular market. Nevertheless, change in exchange rates also induces change in marginal cost of production. The novelty of our paper lies in an ability to differentiate the effect of change in exchange rates on the markup adjustment from that on the marginal cost, by making use of the simple cost structure in the textile industry. Without applying time dummies as proxies for cost as in Knetter (1995), the empirical validity of the restrictions on parameters implied by theory can now be formally tested. We find significant evidence for the pricing to market behavior of Taiwan’s exports of woven fabric of synthetic fiber. Of more interest is the finding that producers adjust their markups to a greater extent for exports to the U.S. and Indonesia in the absence of quota protections, suggesting higher competition. |