Is the Border Really That Wide?
This paper analyzes cross-border price behavior in a three-dimensional sample of US and Canadian retail prices. Unit-root tests reveal that a majority of the cross-border relative price series are stationary and that short-run cross-border price differences are eliminated at average speeds comparable to those for intranational prices. Cross-border convergence is not absolute; the long-run international price differences average two to three times their intranational counterparts. Moreover, gravity-type equations reveal a border effect that is sizable but considerably smaller than earlier estimates. These results suggest that, while significant, the Canada-US border may not be the formidable barrier portrayed in previous studies. Copyright � 2006 The Author; Journal compilation � 2006 Blackwell Publishing Ltd.
Volume (Year): 14 (2006)
Issue (Month): 3 (08)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576 |
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0965-7576|
When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:14:y:2006:i:3:p:392-413. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.