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Price dispersion across countries and the heterogeneous impacts of income differences

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  • Liu, Yue

Abstract

Using price information about thousands of identical products sold across over 70 countries, I show that the deviations from Law of One Price (LOP) are substantial, and relatively smaller for higher-priced products. In addition, I find that income difference across countries is one reason for the price dispersions, and its impact is smaller for higher-priced products.

Suggested Citation

  • Liu, Yue, 2016. "Price dispersion across countries and the heterogeneous impacts of income differences," Economics Letters, Elsevier, vol. 140(C), pages 64-67.
    • Handle: RePEc:eee:ecolet:v:140:y:2016:i:c:p:64-67
    DOI: 10.1016/j.econlet.2016.01.012
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    References listed on IDEAS

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    6. Yuriy Gorodnichenko & Oleksandr Talavera, 2017. "Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-Border Integration," American Economic Review, American Economic Association, vol. 107(1), pages 249-282, January.
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    8. Ina Simonovska, 2015. "Income Differences and Prices of Tradables: Insights from an Online Retailer," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(4), pages 1612-1656.
    9. Alberto Cavallo & Brent Neiman & Roberto Rigobon, 2015. "The Price Impact of Joining a Currency Union: Evidence from Latvia," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(2), pages 281-297, September.
    10. James R. Markusen, 2021. "Putting per-capita income back into trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 10, pages 187-197, World Scientific Publishing Co. Pte. Ltd..
    11. Yilmazkuday, Hakan, 2014. "Price dispersion across US districts of entry," Economics Letters, Elsevier, vol. 123(3), pages 361-365.
    12. Crucini, Mario J. & Yilmazkuday, Hakan, 2014. "Understanding long-run price dispersion," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 226-240.
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    Cited by:

    1. Crucini, Mario J. & Yilmazkuday, Hakan, 2014. "Understanding long-run price dispersion," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 226-240.

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    More about this item

    Keywords

    Law of one price; Income difference; Online price;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance

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