January 1, 1996
Export markets
Two questions are at the centre of this research project. The first question is: How does the Dutch export share change if the relative Dutch export price falls by one per cent? The second question concerns the influence of cost moderation to price setting.
We find a long-term price-elasticity of demand of -3.2 and a cost-elasticity of the price of 0.8. These results are obtained given the hypothesis of imperfect competition. We find that this hypothesis is restrictive. If one abandons the assumption of imperfect competition, a lower price-elasticity is found and also a significant inluence of capacity. The short-term has been investigated in addition to the long-term. In the short-term the ratio of investment to output is significant in the export relation and in the price equation. This variable can be interpreted in the export equation as an indicator for product innovation and in the price equation as an indicator for process innovation.
This document is only available in Dutch.
Authors
Nick Draper