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Pricing in firm-to-firm trade: evidence from a Danish multinational

Author

Listed:
  • Luca Macedoni

    (Aarhus University)

  • Elena Mattana

    (Aarhus University
    TrygFonden’s Centre for Child Research)

Abstract

We study pricing decisions in firm-to-firm trade. Using novel detailed transaction-level data from a Danish multinational firm, we uncover considerable price dispersion across countries, customers, and, surprisingly, within the same customer. In fact, we find that transaction-specific characteristics are the most important factors in explaining price variation. The extent of price dispersion within a customer relationship can be affected by the firm’s price setting strategy. Our unique dataset allows us to examine the consequences of introducing price lists containing recommended and minimum prices. We find that prices converge towards the recommended price, and that price dispersion within a customer can decline if the price lists successfully narrow the pricing range for the products that the customer purchases.

Suggested Citation

  • Luca Macedoni & Elena Mattana, 2024. "Pricing in firm-to-firm trade: evidence from a Danish multinational," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(2), pages 311-375, May.
    • Handle: RePEc:spr:weltar:v:160:y:2024:i:2:d:10.1007_s10290-023-00506-4
    DOI: 10.1007/s10290-023-00506-4
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    More about this item

    Keywords

    Price discrimination; Firm-to-firm trade; Price list;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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