Pricing to Market and International Trade

This book examines whether US exporters of agricultural commodities, including wheat, beef, pork, corn, soybean and lettuce, price to market in both monopolistic and oligopolistic framework. US exporters’ pricing behavior in the world market can be revealed by the relationships between US export prices and exchange rates after other relevant variables are taken into account. In a static monopolistic framework, considering the seasonality characteristics of prices and costs of agricultural products, a seasonal error correction model, which uses the concepts of seasonal cointegration and seasonal common trends, has been estimated to capture the stochastic variation of the data and show the relation between economic theory and economic reality. In cases where seasonal cointegration is rejected by the hypothesis test, a vector error correction model is used to account for the non-stationary property of the data. The fixed-effects model of Knetter (1989; 1995) is also estimated to show any discrepancies between the results of the cointegration model and the fixed-effects regression. The cointegration method confirms strong imperfect competition and destination-specific characteristics