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A Survey on the Existence of Price Discrimination Behavior in Iran’s Saffron Exporting Market by Using PTM Model

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  • Mahmoodi, Elahe
  • Mahmoodi, Majid

Abstract

One of the most important effects of exchange rate movements is its effection the exporting price of different products. According to the new trade theories, market structure plays an important role in relating exchange rate depreciations to price declines. In Iran, exchange rate has increased in recent years. Inspired by this assumption, this paper attempts to investigate the impact of exchange rate movements on the export price of saffron (which is the most important non-oil export product after pistachio)in Iran over the period of 2001-2012. As shown by the results of the present study, the country effect (λi) for each destination is significant except for United States. In addition, the exchange rate’s coefficient is significant for all countries in our sample. Accordingly, as also indicated by the related literature,the hypothesis of the existence of competitive market is rejected, and this lends support to the idea that price discrimination in saffron market is regularly applied by Iranian exporters,which suggests that the government should try to support this strategic product by suitable policies.

Suggested Citation

  • Mahmoodi, Elahe & Mahmoodi, Majid, 2016. "A Survey on the Existence of Price Discrimination Behavior in Iran’s Saffron Exporting Market by Using PTM Model," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 6(4), December.
    • Handle: RePEc:ags:ijamad:262613
    DOI: 10.22004/ag.econ.262613
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    References listed on IDEAS

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    1. Salvador Gil‐Pareja, 2002. "Export Price Discrimination in Europe and Exchange Rates," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 299-312, May.
    2. Choudhri, Ehsan U. & Hakura, Dalia S., 2015. "The exchange rate pass-through to import and export prices: The role of nominal rigidities and currency choice," Journal of International Money and Finance, Elsevier, vol. 51(C), pages 1-25.
    3. Martin Falk & Rahel Falk, 2000. "Pricing to Market of German Exporters: Evidence from Panel Data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 27(1), pages 21-46, March.
    4. Amit Ghosh & Ramkishen S. Rajan, 2007. "A Comparative Analysis of Export Price Pass-through in Three Open Asian Economies: Korea, Singapore and Thailand," Global Economic Review, Taylor & Francis Journals, vol. 36(3), pages 287-299.
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