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International Price Dispersion and Market Segmentation in Japan and the United States: Theory and Empirics

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Author Info

  • Fung, Kwok-Chiu

    (Asian Development Bank Institute)

  • Garcia-Herrero, Alicia

    (Asian Development Bank Institute)

  • Ng, Francis

    (Asian Development Bank Institute)

Abstract

This paper focuses on the pricing behavior of Japanese and United States firms selling their identical products in New York City, Chicago, Osaka, and Tokyo. The authors utilize some simple models of international price dispersion and market segmentation that generate predictions about testable prices. The dataset, which consists of prices of identical products in the Japanese and American cities, was collected and accepted by both governments. Using this data, versions of international price dispersion theories are tested and some empirical evidence to support the view that simple international price dispersion models can partly explain the observed prices is found.

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File URL: http://www.adbi.org/files/2013.04.19.wp417.price.dispersion.market.segmentation.jp.us.pdf
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Bibliographic Info

Paper provided by Asian Development Bank Institute in its series ADBI Working Papers with number 417.

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Length: 18 pages
Date of creation: 19 Apr 2013
Date of revision:
Handle: RePEc:ris:adbiwp:0417

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Keywords: pricing behavior; price dispersion; price dispersion theories; international price dispersion;

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  1. Philipp Maier, 2010. "An Analysis Of International Price Differentials On Ebay," Contemporary Economic Policy, Western Economic Association International, vol. 28(3), pages 307-321, 07.
  2. K.C. Fung, 1991. "Characteristics of Japanese Industrial Groups and Their Potential Impact on U. S . - Japanese Trade," NBER Chapters, in: Empirical Studies of Commercial Policy, pages 137-168 National Bureau of Economic Research, Inc.
  3. Nathalie Aminian & KC Fung & Alicia Garcia-Herrero & Chelsea C Lin, 2007. "The Political Economy of Exchange Rates: The Case of the Japanese Yen," Working Papers 0702, BBVA Bank, Economic Research Department.
  4. Bernhofen, Daniel M., 1999. "Intra-industry trade and strategic interaction: Theory and evidence," Journal of International Economics, Elsevier, vol. 47(1), pages 225-244, February.
  5. Pinelopi K. Goldberg & Frank Verboven, 2001. "Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market," NBER Working Papers 8402, National Bureau of Economic Research, Inc.
  6. Fung, K. C., 2002. "International Trade and Bank Groups: Welfare Enhancing or Welfare Reducing?," Journal of the Japanese and International Economies, Elsevier, vol. 16(2), pages 212-226, June.
  7. K. C. Fung, 1991. "Collusive Intra-industry Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 391-404, May.
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