Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market

@article{Goldberg2001MarketIA,
  title={Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market},
  author={Pinelopi Koujianou Goldberg and Frank Verboven},
  journal={European Economics eJournal},
  year={2001}
}
This Paper exploits the unique experiment of European market integration to investigate the relationship between integration and price convergence in international markets. Using a panel data set of car prices we examine how the process of integration has affected cross-country price dispersion in Europe. We find surprisingly strong evidence of convergence towards both the absolute and the relative versions of Purchasing Power Parity. Our analysis illuminates the main sources of segmentation in… 
View on SSRN
lirias.kuleuven.be
433 Citations
Highly Influential Citations
26
Background Citations
139
Methods Citations
44
Results Citations
26

433 Citations

Citation Type

Citation Type

Price convergence in the European car market
This article examines price convergence in the European Union (EU) car market over the period 1995 to 2005. We find that there is a clear evidence of price convergence among the EU15 countries, but…
Testing the Market Integration Process in the European Car Sector: Evidence from Pricing‐To‐Market Behaviour
In this study, we investigate the process of the European car market integration by analysing the evolution of cross‐country differences in the degree of pricing‐to‐market behaviour of United Kingdom…
Price Convergence in the European Car Market
This paper examines price convergence in the European Union Car market over the period 1995-2005. The results indicate that there is a clear evidence of price convergence among the EU15 countries,…
Examining goods market integration in the Eurozone: evidence obtained from an analysis of price-setting by UK automobile exporters
This paper investigates whether the pervasive dispersion of automobile prices within the Eurozone (1999-2006) is caused by the existence of market segmentation and divergences in the market…
Price Convergence in the European Union: Within Firms or Composition of Firms?
In this paper we use data on French export prices at the disaggregated firm and product level to evaluate the effect of economic integration on price convergence. We use the European integration…
Market integration and price convergence in the European Union
The implementation of international treaties in the European Union was expected to promote integration of consumer markets. Using Economist Intelligence Unit Worldwide Cost of Living Survey data, I…
Market Integration in the EU Pork Market – Evidence from Panel ESTAR Models
Market integration is a key pre-condition for the efficient allocation of production factors and the maximization of economic welfare. Within this framework the aim of this research is to assess…
Convergence in car prices among European countries
This article contributes to the literature on price convergence in Europe by investigating the existence of stochastic and deterministic convergence of car prices in the EU15 countries. We apply…
Market integration and convergence to the law of one price in the North American onion markets
The North American agricultural markets have become much more integrated; but the level of integration varies across sectors and over time. Differential tariff phasing-out periods and remaining trade…
The Law of One Price: Evidence from the Transitional Economy of China
Abstract This paper applies the recently developed econometric methods of panel unit root tests and nonlinear mean reversion to investigate price convergence in China—the largest transitional economy…
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 46 REFERENCES
The Evolution of Price Dispersion in the European Car Market
Car prices in Europe are characterized by large and persistent differences across countries. The purpose of this paper is to document and explain this price dispersion. Using a panel data set…
International price discrimination in the European car market : An econometric model of oligopoly behavior with product differentiation
Why are car prices so different across European countries? I construct and estimate an oligopoly model to analyze whether international price discrimination can explain the puzzle. Three sources of…
Measuring Product-Market Integration
Globalization -- the integration of national economies -- has become one of the most widely used buzzwords of the late 20th century. Yet there are remarkably few statistical measures of…
Price Level Convergence Among United States Cities: Lessons for the European Central Bank
We study the dynamics of price indices for major U.S. cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate. In a panel of…
Pricing to Market When the Exchange Rate Changes
It has been widely remarked that US import prices have not fully reflected movements in the exchange rate. This paper begins with an investigation of the actual extent of "pricing to market" by…
Monetary Union, Price Level Convergence, and Inflation: How Close is Europe to the United States?
In light of 50 years of economic policies designed to integrate Europe -- culminating in the elimination of euro zone national currencies in early 2002 -- and a vast academic literature on…
Price Index Convergence Among United States Cities
We study the dynamics of price indices for major U.S. cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate. In a panel of…
The Law of One Price - a Case Study
We use retail transaction prices for a multinational retailer to examine the extent and permanence of violations of the law of one price (LOOP). For identical products, we find typical deviations of…
Goods Prices and Exchange Rates: What Have We Learned?
Import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country. Recent research indicates that common-currency relative prices for similar…
Convergence to the Law of One Price Without Trade Barriers or Currency Fluctuations
Using a panel of 51 prices from 48 cities in the United States we provide an upper bound estimate of the rate of convergence to Purchasing Power Parity. We find convergence rates substantially higher…
...
1
2
3
4
5
...