Business, Management and Accounting
8 years ago

Setting export prices in importer's currency boosts profits under exchange rate uncertainty.

Journal of International Economics
In which currency should exporters set their prices?
Richard Friberg

Paper Summary

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The article explores the best currency for exporters to set their prices in when faced with exchange rate uncertainty. It finds that setting prices in the importer's currency can lead to the highest expected profit and utility under certain conditions on demand and cost functions. This means that when exporters are risk-averse and use forward currency markets, pricing in the importer's currency can be the most beneficial choice.