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Price convergence in the EU: What can we learn from the car market?

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  • Strasser, Georg

Abstract

The dispersion of prices between Member States of the European Union (EU) is a popular indicator of the economic integration of the internal market. Car prices in the EU converged from the 1990s until the year 2003, after which this development ceased. The remaining price dispersion between countries is systematically linked to product features, reflecting manufacturer pricing-to-market. JEL Classification: F15, F31, L11, L62, D22

Suggested Citation

  • Strasser, Georg, 2018. "Price convergence in the EU: What can we learn from the car market?," Research Bulletin, European Central Bank, vol. 46.
    • Handle: RePEc:ecb:ecbrbu:2018:0046:
    Note: 1137785
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    References listed on IDEAS

    as
    1. Alberto Cavallo & Brent Neiman & Roberto Rigobon, 2014. "Currency Unions, Product Introductions, and the Real Exchange Rate," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 529-595.
    2. Dvir, Eyal & Strasser, Georg, 2018. "Does marketing widen borders? Cross-country price dispersion in the European car market," Journal of International Economics, Elsevier, vol. 112(C), pages 134-149.
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    Cited by:

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    2. Nes, Kjersti & Ciaian, Pavel & Di Marcantonio, Federica, 2021. "Economic determinants of differences in the composition of seemingly identical branded food products in the EU," Food Policy, Elsevier, vol. 100(C).

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    More about this item

    Keywords

    arbitrage; border effect; European car market; international price dispersion; law of one price; market segmentation;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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