A Survey on the Existence of Price Discrimination Behavior in Iran’s Saffron Exporting Market by Using PTM Model

Abstract

One of the most important effects of exchange rate movementsisitseffecton the exporting price of different products. According to the new trade theories, market structure plays an important role in relating exchange rate depreciations to price declines. In Iran, exchange rate has increased in recent years.Inspired by this assumption, this paper attempts to investigate the impact of exchange rate movements on the exportprice of saffron (which is the most important non-oil export product after pistachio)in Iran over the period of 2001-2012.As shown by the results of the present study, the country effect (λi) for each destination is significant except for United States. In addition, the exchange rate's coefficient is significant for all countries in our sample. Accordingly, as also indicated by the related literature,the hypothesis of the existence of competitive market is rejected, and this lends support to the idea thatprice discrimination in saffron marketis regularly applied by Iranian exporters,whichsuggeststhat the government should try to support this strategic product by suitable policies.