Pricing-to-Market at Firm Level: Evidence from the Russian Wheat Export Market

Over the last decade, major shifts have occurred in international wheat trade. On the supply side, Russia, Ukraine and Kazakhstan emerged as important wheat exporters and Russia is even projected to displace the United States as the leading exporter by 2021. We analyze the pricing behavior of Russian wheat exporting firms. Our investigations are based on Krugman’s pricing-to-market (PTM) hypothesis. Our empirical findings, adopting Knetter’s panel model, indicate PTM behavior in 14 out of 59 wheat importing nations within our sample period 1998-2011, using firm-level data. We link our findings with market characteristics to illuminate a source of price discrimination.