To the surprise of many, price deviations between markets characterized by imperfect competition have often been little affected by lower transport costs. In a Cournot model we show that if firms' decisions to segment markets are endogenous, then lower transport costs are, in many cases,...

To the surprise of many, price deviations between markets characterized by imperfect competition have often been little affected by lower transport costs. In a Cournot model we show that if firms' decisions to segment markets are endogenous, then lower transport costs are, in many cases,...

Does the common currency promote goods market integration within the EMU? We argue that such an effect is likely, but that the mechanism typically proposed lover costs of arbitrage because of increased price transparency is likely to be of minor importance. Instead we sketch a duopoly model...

Does the common currency promote goods market integration within the EMU? We argue that such an effect is likely, but that the mechanism typically proposed - lover costs of arbitrage because of increased price transparency - is likely to be of minor importance. Instead we sketch a duopoly model...

We examine deviations from the law of one price (LOP) with price data from duty-free outlets where each product, at a given location, has its price quoted in (at least) two currencies. Reluctance to adjust relative prices for "small" deviations from LOP allows prices to differ by up to 7-10...

Does the common currency promote goods market integration within the EMU? We argue that such an effect is likely, but that the mechanism typically proposed – lover costs of arbitrage because of increased price transparency – is likely to be of minor importance. Instead we sketch a duopoly...

This paper examines the decision to create barriers to arbitrage for a firm selling on two national markets. Sunk costs of market segmentation imply that the option to segment markets is more valuable the greater the variability of purchasing power between markets. One result is that a monetary...

While many studies have documented deviations from the Law of One Price in international settings, evidence is scarce on the extent to which consumers take advantage of price differentials and engage in cross border shopping. We use data from 287 Swedish municipalities to estimate how responsive...