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Regional Mc parity: do common pricing points reduce deviations from the law of one price?


Mathä, Thomas Y.


Bitte beziehen Sie sich beim Zitieren dieses Dokumentes immer auf folgenden Persistent Identifier (PID):http://nbn-resolving.de/urn:nbn:de:0168-ssoar-203143

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Abstract This paper analyses price differences of McDonald's products in four different countries. I show that pricing at pricing points in different currencies may contribute to explaining deviations from the law of one price. Observing strictly equal prices is more probable if prices are set at psychological and fractional pricing points in a common currency. The latter is also found to reduce the size of price deviations. Additionally, price differences increase as transaction costs increase. Based on this data set there is no evidence that the euro has reduced price deviations.
Klassifikation Volkswirtschaftslehre; Öffentliche Finanzen und Finanzwissenschaft
Freie Schlagwörter Law of one price; Psychological and fractional prices; European monetary union; E31; F41; R11
Sprache Dokument Englisch
Publikationsjahr 2009
Seitenangabe S. 155-166
Zeitschriftentitel Review of World Economics, 145 (2009) 1
DOI http://dx.doi.org/10.1007/s10290-009-0005-6
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)