Conceptualizing Service Export Price Optimization

Sinha, Avik (2015): Conceptualizing Service Export Price Optimization. Published in: International Journal of Commerce and Management , Vol. 25, No. 3 (2015): pp. 309-329.

Abstract

• Purpose: In this paper, it has been tried to formulate a conceptual model for service-oriented export pricing by looking at both demand and supply side considerations by taking export price as a function of domestic price of service. • Design/methodology/approach: Continuous time optimization technique has been adopted for maximization of the profit earned by firm in the domestic and foreign market for both demand and supply side scenarios. Dynamic simulations have also been carried out in order to find out the sensitivity of parameters in diverse scenarios. • Findings: We have received different results for demand and supply sides for export price optimization. Various pricing objectives have been aligned to the price determining parameters in accordance with the dynamic simulation performances. • Research limitations/implications (if applicable): Continuous time optimization served our purpose, as we did not consider sustainability of the same decision over a longer period. However, discrete time optimization can be taken up, if effect of a series of decisions is scrutinized. More flexibility can be incorporated in the model, if a range of domestic price is considered over the singular domestic price. • Practical implications (if applicable): This paper is significant for those firms, which are willing to extend their operations beyond the national boundary. The models derived here can give them an idea about how to price service in foreign market. • Originality/value: Aligning pricing objectives with export price determining parameters by considering demand and supply side perspectives in a continuous time optimization model is a new contribution in the existing literature.

• Item Type: MPRA Paper
• Language: English
• Keywords: export price, continuous time optimization, inflation, price elasticity of demand, willingness to pay, production function
• Subjects: F - International Economics > F1 - Trade; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

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