Menu costs drive Canadian pork exporters to invoice in foreign currency.
The article looks at how Canadian pork exporters decide on prices and currency when selling to the U.S. and Japan. Menu costs can affect price adjustments, but only when prices are in the exporter's currency. When prices are in the importer's currency, menu costs don't have the same impact. The study used data on pork exports from two Canadian provinces and found that Quebec and Manitoba exporters invoice in Japanese yen to Japan. Quebec exporters also have some market power. Manitoba exporters may struggle to increase profits after currency devaluations. For sales to the U.S., some Canadian firms use either Canadian or U.S. currency for invoicing.