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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 315

Classification and Topics

• Classification: Wirtschaft
• Subject: Price setting ; price discrimination ; Außenhandelspreis ; Betriebliche Preispolitik ; Preisdifferenzierung ; Internationaler Preiszusammenhang ; Möbelhandel ; Schätzung ; EU-Staaten ; IKEA Svenska Försa&Öljnings AB <Ödäkra>

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hassink, Wolter H.J. ; Schettkat, Ronald
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/21170
• Last update: 10.03.2025, 11:42 AM CET