This Policy Brief is in Swedish.
Exporting firms often charge different prices in different markets. Most recent studies emphasize variations in product quality as an explanation. This study examines whether price differences can instead be explained by market segmentation; that is firms setting different prices in different export markets for a product in order to increase profits. The study covers all Swedish exporting firms in agriculture, food processing and wholesale/retail. The results show that:
- It is common for Swedish exporters in the food supply chain to charge different prices in different markets for at product.
- It is only in the food-processing industry that a high variation in export prices is associated with a higher markup and higher levels of profit.
- Markups are a function of firm characteristics, such as a strong brand, rather than country characteristics, indicating that “Made in Sweden” is not a feature that can generally be used to increase profits in export markets.