Equilibrium Price Dispersion and the Border Effect PDF Download
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Author: Ryan Chahrour
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Ryan Chahrour
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Ryan Chahrour
Publisher:
ISBN:
Category :
Languages : en
Pages : 51
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Book Description
We find that observed cross-country price differences primarily reflect regional market segmentation occurring within countries. Using a model of price-setting subject to costly search, we show that identification of national versus regional segmentation requires augmenting price data with regional trade flow data. Calibrating the model to data from U.S. and Canadian regions, we estimate substantial regional trade frictions: U.S. producers are three times less likely to sell to retailers in the "away" region of the United States than in their own region, and only slightly less likely to sell to a region in Canada, controlling for market size differences. Canadian producers have an even stronger home bias: they are 7 times more likely to sell in their own region than in the "away" region in Canada, and 11 times more likely to sell in their own region than in a U.S. region. Models that do not explicitly account for regional home bias can misstate the severity of segmentation at the national border.
Author: David C. Parsley
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Crossing national borders adds significantly to price dispersion. This study of prices in Japan and the United States finds that a substantial part of that border effect is attributable to distance, shipping costs, exchange rates, and relative variability in wages. Parsley and Wei exploit three-dimensional panel data on prices for 27 traded goods, over 88 quarters, across 96 cities in Japan and the United States, to answer several questions: - Does the average exchange rate between countries stray further from zero than that between cities within a country? - Is there any tendency for the average exchange rate to move closer to zero over time? - Does the border narrow over time? - Is there evidence linking changes in the so-called border effect - the extra dispersion in prices between cities in different countries beyond what physical distance could explain - with plausible economic explanations, such as exchange rate variability? The authors present evidence that the intranational real exchange rates are substantially less volatile than the comparable distribution of international relative prices. They also show that an equally weighted average of commodity-level real exchange rates tracks the nominal exchange rate well, suggesting strong evidence of sticky prices. Next they turn to economic explanations for the dynamics of the border effect. Focusing on the dispersion of prices between city pairs, they confirm previous findings that crossing national borders adds significantly to price dispersion. Based on their point estimates, crossing the U.S.-Japan border is equivalent to adding between 2.5 and 13 million miles to the cross-country volatility of relative prices. They infer that distance, exchange rates, shipping costs, and relative variability in wages influence the border effect. After those variables are controlled for, the border effect disappears. This paper - a product of Public Economics, Development Research Group - is part of a larger effort in the group to understand international capital flows.
Author: James D. Dana
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 40
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Author: Fernando Borraz
Publisher:
ISBN:
Category :
Languages : en
Pages :
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We propose a decomposition of the border effect in international trade by controlling for differences in competition in local markets. An extension of the Hotelling (1929) model shows that the availability of local substitutes increases price dispersion and biases the estimation of the border effect. We test these predictions using detailed price database at the supermarket level for Uruguay. This stylized setting makes it possible to control for other potential explanations of the border effect (i.e., exchange rates, taxes, or transport costs). We find that for those goods without local competitors the border estimation increases substantially, while for those goods that do have local competitors the effect of border is negligible. As the literature suggests, results should be even larger for different countries than for different cities. The methodology developed in the paper allows a finer explanation for understanding the relevance of borders in price dispersion.
Author: Kazuya Kamiya
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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The main purpose of this article is to show that, for any given parameter value, an equilibrium with dispersed prices (two-price equilibrium) exists in Green and Zhou's matching model with divisible money. The welfare effect of price dispersion is also analyzed.
Author:
Publisher: Springer
ISBN: 1349588024
Category : Law
Languages : en
Pages : 7493
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Book Description
The award-winning The New Palgrave Dictionary of Economics, 2nd edition is now available as a dynamic online resource. Consisting of over 1,900 articles written by leading figures in the field including Nobel prize winners, this is the definitive scholarly reference work for a new generation of economists. Regularly updated! This product is a subscription based product.
Author: David C. Parsley
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 38
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Crossing national borders, adds significantly to price dispersion. This study of prices in Japan and the United States finds that a susbstantial part of that border effect is attributable to distance, shipping costs, exchange rates, and relative variability in wages.
Author: Paul J.J. Welfens
Publisher: Springer Science & Business Media
ISBN: 3642162746
Category : Business & Economics
Languages : en
Pages : 411
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Book Description
Financial capital, whether mediated through the financial market or Foreign Direct Investment has been a key factor in European economic growth. This book examines the interaction between European and global financial integration and analyses the dynamics of the monetary sector and the real economy in Europe. The key analytical focus is on the theoretical and empirical dynamics of financial markets in Europe, however, it also provides regional case studies of key institutional developments and lessons from foreign direct investment. There is a broad range of findings for Central, Eastern and Western Europe as well as EU Partner Countries. Crucially the analysis includes new approaches and options for solving the transatlantic banking crisis and suggests policy innovations for a world with unstable financial markets.
Author: Sebastian Edwards
Publisher: University of Chicago Press
ISBN: 022631569X
Category : Business & Economics
Languages : en
Pages : 392
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Book Description
Studies of African economic development frequently focus on the daunting challenges the continent faces. From recurrent crises to ethnic conflicts and long-standing corruption, a raft of deep-rooted problems has led many to regard the continent as facing many hurdles to raise living standards. Yet Africa has made considerable progress in the past decade, with a GDP growth rate exceeding five percent in some regions. The African Successes series looks at recent improvements in living standards and other measures of development in many African countries with an eye toward identifying what shaped them and the extent to which lessons learned are transferable and can guide policy in other nations and at the international level. The fourth volume in the series, African Successes: Sustainable Growth combines informative case studies with careful empirical analysis to consider the prospects for future African growth.
