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The Law of one Price in the Russian Economy

  • Konstantin Gluschenko

Taking the law of one price as a test for market integration, the spatial set-up of Russia's market integration over 1994-2000 is analyzed with the use of time series of the cost of a staples basket across Russian regions. The law is found to hold for about 50% to 60% of Russian regions, estimates of a threshold model suggesting rather high barriers to inter-regional trade. To reveal whether there is a movement towards market integration among non-integrated regions, dynamics of cross-sectional distribution of prices receives study. The results indicate that such a tendency does take place. An effort is made to identify forces responsible for Enter-regional price disparities.

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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 15204.

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Length: 40 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:lic:licosd:15204
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