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Convergence In Car Prices Among European Countries

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  • Simon Sosvilla-Rivero

    (UCM - Universidad Complutense de Madrid = Complutense University of Madrid [Madrid])

  • Salvador Antonio Gil-Pareja

    (Estructura Económica - University of Valencia)

Abstract

This paper contributes to the literature on price convergence in Europe by investigating the existence of stochastic and deterministic convergence of car prices in the EU15 countries. We apply recently developed econometric techniques that allow for multiple structural breaks to an up-to-date dataset. We find considerable evidence of both types of convergence in our sample of countries and car models, therefore suggesting a tendency for relative prices to equalise over time. In addition, we find evidence regarding the importance in this convergence process of both legislative changes taking place in the years 1996 and 2002, and the implementation of EMU.

Suggested Citation

  • Simon Sosvilla-Rivero & Salvador Antonio Gil-Pareja, 2011. "Convergence In Car Prices Among European Countries," Post-Print hal-00711454, HAL.
    • Handle: RePEc:hal:journl:hal-00711454
    DOI: 10.1080/00036846.2011.570728
    Note: View the original document on HAL open archive server: https://hal.science/hal-00711454
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    References listed on IDEAS

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    1. 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.
    2. Wells, Peter & Varma, Adarsh & Newman, Dan & Kay, Duncan & Gibson, Gena & Beevor, Jamie & Skinner, Ian, 2013. "Governmental regulation impact on producers and consumers: A longitudinal analysis of the European automotive market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 47(C), pages 28-41.
    3. Keith Head & Thierry Mayer, 2021. "The United States of Europe: A Gravity Model Evaluation of the Four Freedoms," Journal of Economic Perspectives, American Economic Association, vol. 35(2), pages 23-48, Spring.
    4. Michał Konopczyński, 2013. "Fiscal policy within a common currency area – growth implications in the light of neoclassical theory," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 7(3), September.

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