|
|
|
|
Title: |
Exchange Rate Pass-Through in an International Duopoly Model with Brand
Loyalty |
| Author: |
Chang,
Byoung-Ky |
| Author
Affiliation: |
SK Securities,
Seoul |
| Source: |
International Economic Journal, Spring 2001, v. 15, no. 1, pp. 41-59 |
|
Publication Date: |
Spring 2001 |
|
Abstract: |
In many markets, consumers who have
previously purchased from one firm have (or perceive) costs of switching
to a competitor's product. This study explicitly analyzes, in an
international duopoly model with brand loyalty, the effect of rival
exchange rate on exchange rate pass-through. In the case of the
imperfect foresight, the exchange rate pass-through is affected by the
exchange rate uncertainty. Due to the brand loyalty, current price
decisions will affect future profits through market shares. The expected
future profit is affected by expected competition situations that depend
on the interactive movement of future exchange rates. |
|
