英文關鍵字：
Exchange Rate;Export Price;Dominant Currency
摘要：
This paper sets out to investigate the effects of export market competitors' exchange rates on export pricing of Taiwanese manufacturing firms under dominant currency pricing (DCP hereafter). DCP occurs when exports are priced in a dominant currency (mainly the U.S. dollar, USD). It has been discussed that under DCP, export prices in the producer's currency are expected to be more responsive to the exchange rate between the producer's currency and the USD than the bilateral exchange rate between the producer's and the destination country's currencies. The novelty of this paper is that we expand the research on export pricing under DCP and consider competitors' exchange rates. In the empirical analysis, we use Taiwanese customs data at the firm-product-country level from 2010 to 2019. Similar to many small open economies, Taiwan's exports are predominantly invoiced in the U.S. dollar (90.64%), making it suitable for studying firm responses to exchange rates under DCP. Based on the export similarity index that we constructed using Finger and Kreinin's (1979) method, the country with the most similar export structure is South Korea, making it the most important competitor for Taiwanese manufacturing firms. Our results suggest the following. First, export prices in the Taiwan dollar (TWD) are more sensitive to the TWD-USD exchange rate than the bilateral exchange rate against the destination country. A depreciation of the TWD leads to an increase in export prices. Second, after controlling for the effects of the TWD-USD exchange rate, a depreciation of the Korean won (KRW) against the USD causes a reduction in export prices for Taiwanese firms. Third, the effect of the KRW exchange rate on export prices is more pronounced for firms whose export products are more similar to those of South Korea.
