Abstract
AbstractWe study pricing decisions in firm-to-firm trade. Using novel detailed transaction-level data from a Danish multinational firm, we uncover considerable price dispersion across countries, customers, and, surprisingly, within the same customer. In fact, we find that transaction-specific characteristics are the most important factors in explaining price variation. The extent of price dispersion within a customer relationship can be affected by the firm’s price setting strategy. Our unique dataset allows us to examine the consequences of introducing price lists containing recommended and minimum prices. We find that prices converge towards the recommended price, and that price dispersion within a customer can decline if the price lists successfully narrow the pricing range for the products that the customer purchases.
Funder
Royal Danish Library, Aarhus University Library
Publisher
Springer Science and Business Media LLC
Subject
General Economics, Econometrics and Finance
Reference43 articles.
1. Alessandria, G., & Kaboski, J. P. (2011). Pricing-to-market and the failure of absolute PPP. American Economic Journal: Macroeconomics, 3(1), 91–127.
2. Alonso, R., Dessein, W., & Matouschek, N. (2008). When does coordination require centralization? American Economic Review, 98(1), 145–79.
3. Arkolakis, C., Ganapati, S., & Muendler, M.-A. (2021). The extensive margin of exporting products: A firm-level analysis. Americal Economic Journal: Macroeconomics, 13(4), 182–245.
4. Atkeson, A., & Burstein, A. (2008). Pricing-to-market, trade costs, and international relative prices. American Economic Review, 98(5), 1998–2031.
5. Bernard, A. B., Dhyne, E., Magerman, G., Manova, K., & Moxnes, A. (2021). The origins of firm heterogeneity: A production network approach. Journal of Political Economy, 130(7), 1765–1804.