Spatial Price Discrimination in International Markets

  title={Spatial Price Discrimination in International Markets},
  author={Julien Martin},
Firms’ fob prices can vary depending on the distance to the destination market for two reasons: (i) firms can charge a different markup (ii) they can offer a product with slightly different quality. In theoretical models, distance generally covers transport costs. This paper shows that the response of firms’ prices to changes in distance to the destination market depends on the formulation of transport costs. Assuming additive or iceberg transport costs may imply opposite predictions concerning… CONTINUE READING

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