International Price Dispersion and Market Segmentation in Japan and the United States: Theory and Empirics

18 Pages Posted: 20 Apr 2013

See all articles by K. C. Fung

K. C. Fung

University of California at Santa Cruz

Alicia García-Herrero

Bruegel; Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS); Natixis

Francis Ng

World Bank - Development Research Group (DECRG)

Date Written: April 19, 2013

Abstract

This paper focuses on the pricing behavior of Japanese and United States firms selling their identical products in New York City, Chicago, Osaka, and Tokyo. The authors utilize some simple models of international price dispersion and market segmentation that generate predictions about testable prices. The dataset, which consists of prices of identical products in the Japanese and American cities, was collected and accepted by both governments. Using this data, versions of international price dispersion theories are tested and some empirical evidence to support the view that simple international price dispersion models can partly explain the observed prices is found.

Keywords: pricing behavior, price dispersion, price dispersion theories, international price dispersion

JEL Classification: F12, F14, L11, L13

Suggested Citation

Fung, K.C. and Garcia-Herrero, Alicia and Ng, Francis, International Price Dispersion and Market Segmentation in Japan and the United States: Theory and Empirics (April 19, 2013). ADBI Working Paper 417, Available at SSRN: https://ssrn.com/abstract=2253841 or http://dx.doi.org/10.2139/ssrn.2253841

K.C. Fung (Contact Author)

University of California at Santa Cruz ( email )

Santa Cruz, CA 95064
United States
831-459-3273 (Phone)
831-459-5900 (Fax)

Alicia Garcia-Herrero

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS) ( email )

IAS 2019, Lo Ka Chung Building,
Lee Shau Kee Campus, HKUST
Clear Water Bay, Kowloon
Hong Kong

Natixis ( email )

France

Francis Ng

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-8088 (Phone)
202-522-1159 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/fng

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