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Cross-country price dispersion in the euro era: a case study of the European car market

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  • Pinelopi Koujianou Goldberg
  • Frank Verboven

Abstract

"This paper investigates the effects of the European monetary union on cross-country price differences in the European car market. The analysis utilizes disaggregate, bi-annual data on the prices of almost all car models sold in the 15 countries of the European Union over 1993-2003. The data refer to identical models, with identical specifications and options. To identify the euro's effect, we exploit the fact that out of the 15 countries in our sample, 12 joined Euroland at the beginning of 1999 and officially adopted the euro as their national currency at the beginning of 2002, while 3 countries remained outside the monetary union. We investigate whether there is a systematic difference in the evolution of cross-country price dispersion between Euroland members and non-members after 1999. Our analysis distinguishes between Phase I (monetary union with national currencies preserved, 1999-2001) and Phase II (official adoption of the euro as a national currency in 2002). We examine the evolution of both the absolute price differentials across countries, and the speed with which deviations from the long-term cross-country differentials are eliminated." Copyright � CEPR, CES, MSH, 2004.

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Bibliographic Info

Article provided by CEPR & CES & MSH in its journal Economic Policy.

Volume (Year): 19 (2004)
Issue (Month): 40 (October)
Pages: 483-521

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Handle: RePEc:bla:ecpoli:v:19:y:2004:i:40:p:483-521

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Cited by:
  1. Wolfgang Sofka & Joerg Zimmermann, 2005. "There is no Place Like Home: A Strategic Framework to Overcome Liability of Foreignness in the German Car Market," Industrial Organization 0512003, EconWPA.
  2. Kaiser, Ulrich & Sofka, Wolfgang, 2006. "The pulse of liability of foreignness: dynamic legitimacy and experiences effects in the German car market," ZEW Discussion Papers 06-70, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Christian Dreger & Konstantin Kholodilin & Kirsten Lommatzsch & Jirka Slacalek & Przemyslaw Wozniak, 2007. "Price convergence in the enlarged internal market," European Economy - Economic Papers 292, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  4. Salvador Gil-Pareja & Simon Sosvilla-Rivero, 2007. "Price convergence in the European car market," Applied Economics, Taylor & Francis Journals, vol. 40(2), pages 241-250.
  5. Wolfgang Sofka & Joerg Zimmermann, 2007. "Regional Dimensions of Liability of Foreignness: Between a Rock and a Hard Place?," Jena Economic Research Papers 2007-023, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  6. Riemer P. Faber & Ad C.J. Stokman, 2005. "Price Convergence in Europe from a Macro Perspective: Product Categories and Reliability," DNB Working Papers 034, Netherlands Central Bank, Research Department.
  7. Eyal Dvir & Georg H. Strasser, 2013. "Does Marketing Widen Borders? Cross-Country Price Dispersion in the European Car Market," Boston College Working Papers in Economics 831, Boston College Department of Economics, revised 04 Apr 2014.
  8. Fischer, Christoph, 2009. "Price convergence in the EMU? Evidence from micro data," Discussion Paper Series 1: Economic Studies 2009,06, Deutsche Bundesbank, Research Centre.
  9. Andrén, Niclas & Oxelheim, Lars, 2006. "Producer Prices in the Transition to a Common Currency," Working Paper Series 668, Research Institute of Industrial Economics.
  10. Sofka, Wolfgang & Zimmermann, Jörg, 2008. "Regional economic stress as moderator of liability of foreignness," Journal of International Management, Elsevier, vol. 14(2), pages 155-172, June.
  11. Christian Dreger & Konstantin Kholodilin & Kirsten Lommatzsch & Jirka Slacalek & Przemyslaw Wozniak, 2007. "Price convergence in the enlarged internal market," European Economy - Economic Papers 292, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.

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