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Price dispersion and the euro: Micro heterogeneity and macro implications

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  • Martin, Julien
  • Mejean, Isabelle

Abstract

What is the impact of monetary unions on the integration of goods markets? We address this issue by investigating the effect of the euro on French exporters' pricing strategies toward members of the eurozone. We adopt a difference-in-difference strategy and estimate that the single currency reduced the relative dispersion of export prices in the eurozone by 1 percentage point in comparison to the rest of the European Union. Moreover, we show that the single currency has affected large firms more strongly. When we take this heterogeneity into account, we find a stronger impact for the euro, by 4 percentage points.

Suggested Citation

  • Martin, Julien & Mejean, Isabelle, 2013. "Price dispersion and the euro: Micro heterogeneity and macro implications," International Review of Economics & Finance, Elsevier, vol. 26(C), pages 70-86.
    • Handle: RePEc:eee:reveco:v:26:y:2013:i:c:p:70-86
    DOI: 10.1016/j.iref.2012.08.009
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    Cited by:

    1. Cacciatore, Matteo & Fiori, Giuseppe & Ghironi, Fabio, 2016. "Market deregulation and optimal monetary policy in a monetary union," Journal of International Economics, Elsevier, vol. 99(C), pages 120-137.
    2. repec:hal:spmain:info:hdl:2441/6pke7tv6t487qo0f4obl29kjs6 is not listed on IDEAS
    3. Cacciatore, Matteo & Duval, Romain & Furceri, Davide & Zdzienicka, Aleksandra, 2021. "Fiscal multipliers and job-protection regulation," European Economic Review, Elsevier, vol. 132(C).
    4. Drivas, Kyriakos & Kalyvitis, Sarantis & Katsimi, Margarita, 2023. "Export prices and markups with a common currency: Empirical evidence from Greek exporting firms and euro adoption," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 79-98.
    5. Sarah Guillou & Lionel Nesta Author-Workplace-Name :Ofce Sciences-po,gredeg Cnrs and Skema Business School, 2015. "Markup heterogeneity, export status and the establishment of the euro Classification-JEL :C5,D43,F61,L16,L60," Documents de Travail de l'OFCE 2015-01, Observatoire Francais des Conjonctures Economiques (OFCE).
    6. Cavallo, Antonella & Ribba, Antonio, 2015. "Common macroeconomic shocks and business cycle fluctuations in Euro area countries," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 377-392.
    7. Sarah Guillou & Lionel Nesta, 2015. "Markup heterogeneity, export status ans the establishment of the euro," Sciences Po publications 2015-01, Sciences Po.
    8. Nchake, Mamello A. & Edwards, Lawrence & Rankin, Neil, 2018. "Closer monetary union and product market integration in emerging economies: Evidence from the Common Monetary Area in Southern Africa," International Review of Economics & Finance, Elsevier, vol. 54(C), pages 154-164.

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    More about this item

    Keywords

    Firm-level data; Law of one price; European monetary integration;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F30 - International Economics - - International Finance - - - General

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