Russia's Internal Border

Daniel Berkowitz and David N. DeJong ()

No 189, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan Stephen M. Ross Business School

Abstract: In integrated economies, inter-city price differences can be explained largely by transportation costs. This is not the case in Russia. Here, we argue that this is due to an internal border that separates a region we denote as the Red Belt from the rest of Russia. Regions within the Red Belt exhibit high degrees of price dispersion and thus seem isolated. Moreover, these regions have been relatively slow to adopt economic reforms, and have suffered relatively low growth rates. The impact of the border on price dispersion is shown to be comparable to the impact of the U.S.-Canadian border.

Keywords: price dispersion; market integration (search for similar items in EconPapers)
JEL-codes: P22 R12 (search for similar items in EconPapers)
Date: Written 1998-07-01
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Related works:
Journal Article: Russia's internal border (1999)
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