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Why are Retail Prices in Japan so High?: Evidence from German Export Prices

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  • Michael M. Knetter

Abstract

It is well documented that retail prices in Japan are higher than in other countries for similar products. The two main competing explanations for this finding are: (1) a relatively high degree of discriminatory practices against imports and (2) relatively high distribution costs associated with getting goods to the point of final sale in Japan. The first of these explanations implies that foreign exporters should charge higher prices on shipments to Japan than elsewhere, provided at least some of the rent associated with restrictive practices can be captured by the exporter. For the vast majority of the 37 7-digit German export industries studied here, the data are consistent with this implication. Prices on shipments to Japan appear to be significantly higher than prices on shipments to the United States, the United Kingdom, and Canada.

Suggested Citation

  • Michael M. Knetter, 1994. "Why are Retail Prices in Japan so High?: Evidence from German Export Prices," NBER Working Papers 4894, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4894
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Charles Engel & John H. Rogers, 1995. "Regional Patterns in the Law of One Price: The Roles of Geography vs. Currencies," NBER Working Papers 5395, National Bureau of Economic Research, Inc.
    2. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
    3. Gordhan K. Saini, 2009. "Non-tariff measures and Indian textiles and clothing exports," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2009-002, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. Shimeles, Abebe & Gurara, Daniel Zerfu & Birhanu Tessema, Dawit, 2015. "Market Distortions and Political Rent: The Case of Fertilizer Price Divergence in Africa," IZA Discussion Papers 8998, Institute of Labor Economics (IZA).
    5. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151, December.
    6. Lambelet, Jean-Christian & Mihailov, Alexander, 2005. "The Triple-Parity Law," Economics Discussion Papers 8896, University of Essex, Department of Economics.
    7. Hai Vo, Long & Hong Vo, Duc, 2020. "Long-run dynamics of exchange rates: A multi-frequency investigation," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    8. Sazanami, Yoko & Kimura, Fukunari & Kawai, Hiroki, 1997. "Sectoral Price Movements under the Yen Appreciation," Journal of the Japanese and International Economies, Elsevier, vol. 11(4), pages 611-641, December.
    9. Charles Engel, 1999. "Accounting for U.S. Real Exchange Rate Changes," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 507-538, June.
    10. Campa, Jose Manuel & Goldberg, Linda S, 1999. "Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 287-314, May.
    11. Scott Bradford, 2000. "Rents, Votes, and Protection: Explaining the Structure of Trade Barriers Across Industries," Econometric Society World Congress 2000 Contributed Papers 1717, Econometric Society.
    12. O'Connell, P. G. J., 1998. "Market frictions and real exchange rates1," Journal of International Money and Finance, Elsevier, vol. 17(1), pages 71-95, February.
    13. Gordhan K. Saini, 2009. "Non-Tariff Measures and Indian Textiles and Clothing Exports," Trade Working Papers 22407, East Asian Bureau of Economic Research.
    14. Noland, Marcus, 1995. "Why are prices in Japan so high?," Japan and the World Economy, Elsevier, vol. 7(3), pages 255-261, September.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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