Resource title

On Price-Setting for Identical Products in Markets without Formal Trade Barriers

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Resource description

This paper investigates price-setting for truly homogenous products sold in markets without any formal trade barriers. We use data from IKEA, a furniture company selling identical products in an identical shopping environment in different EU countries. We get four remarkable outcomes: 1) The law of one price does not hold. 2) Country-specific effects of non-tradable cost components are important. 3) Pricing to the market surely occurs but price discrimination is limited by incomplete information. 4) The unexplained part of betweencountry price variation for identical products is about 75% which leaves most of the intercountry price variation unexplained.

Resource author

Wolter H.J. Hassink, Ronald Schettkat

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/21170

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Adapt according to the presented license agreement and reference the original author.