The effect of exchange rate on marketing margin

This study presents a new structural model that incorprates price linkage and marketing marketing margin identity into a common framework. The inclusiom of exchange rate expands the framework to include goods traded in different currencies. This allows emprical estimates to be made of how changes in domestic prices exchange rates and middlemen costs are transmitted to foreign prices and the international marketing margin. The framework is emprically applied to international marketing channel using farmed apple data to investigate how Iranian export prices exchange rates and middlemen costs affect turkey wholesale prices and the marketing margin. Results suggest that the markets are via complete price and exchange rate pass through purely competitive and that the marketing margin only increase when costs of marketing service increase.