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

Frank Verboven and Pinelopi Goldberg

No 2926, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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 international markets and suggests the type of institutional changes that can successfully reduce it.

Keywords: Law of one price; market integration; Price convergence (search for similar items in EconPapers)
JEL-codes: F00 L00 (search for similar items in EconPapers)
Date: 2001-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

Downloads: (external link)
https://cepr.org/publications/DP2926 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Market integration and convergence to the Law of One Price: evidence from the European car market (2005)
Working Paper: Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:2926

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP2926

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().