A `Global Village' without borders? International price differentials at eBay

One of the key advances of the internet age is the increase in transparency. Does high price transparency imply that consumers in different countries pay the same price for similar goods? We compare prices for new, tradable goods sold via the internet auction site eBay. We find ample evidence that prices differ between countries. This indicates that suffcient scope for price discrimination exists between countries, even in very transparent markets such as online auctions. Moreover, our results show that national borders are a key force driving international price differentials. Contrary to other studies, we do not find that having a currency of one's own drives up cross-border price differentials significantly. Lastly, differences in taxes and shipping costs are important factors in explaining price differentials.