This paper builds a baseline two-country model of real and monetary transmission in the presence of optimal international price discrimination by firms. Distributing traded goods to consumers requires nontradables, making the price elasticity of demand country-specific and a function of the exchange rate. Profit-maximizing monopolistic firms drive a wedge between prices across countries, optimally dampening the response of import and consumer prices to exchange-rate movements. We derive general equilibrium expressions for the pass-through into import and consumer prices, tracing the differential impact of real and monetary shocks on marginal cost and markup fluctuations through the exchange rate.

Corsetti, G., Dedola, L. (2005). A macroeconomic model of international price discrimination. INTERNATIONAL ECONOMIC JOURNAL, 67, 129-155 [10.1016/j.jinteco.2004.09.009].

A macroeconomic model of international price discrimination

CORSETTI, Giancarlo;
2005-01-01

Abstract

This paper builds a baseline two-country model of real and monetary transmission in the presence of optimal international price discrimination by firms. Distributing traded goods to consumers requires nontradables, making the price elasticity of demand country-specific and a function of the exchange rate. Profit-maximizing monopolistic firms drive a wedge between prices across countries, optimally dampening the response of import and consumer prices to exchange-rate movements. We derive general equilibrium expressions for the pass-through into import and consumer prices, tracing the differential impact of real and monetary shocks on marginal cost and markup fluctuations through the exchange rate.
2005
Corsetti, G., Dedola, L. (2005). A macroeconomic model of international price discrimination. INTERNATIONAL ECONOMIC JOURNAL, 67, 129-155 [10.1016/j.jinteco.2004.09.009].
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11590/124875
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 149
  • ???jsp.display-item.citation.isi??? 132
social impact