Hump-Shaped Cross-Price Effects and the Extensive Margin in Cross-Border Shopping

Richard Friberg, Frode Steen and Simen Ulsaker

American Economic Journal: Microeconomics, 2022, vol. 14, issue 2, 408-38

Abstract: This paper examines the effect of cross-border shopping on grocery demand in Norway using monthly store × category sales data from Norway's largest grocery chain 2012–2016. The sensitivity of demand to the foreign price is hump-shaped and greatest 30–60 minutes' driving distance from the closest foreign store. Combining continuous demand, fixed costs of cross-border shopping, and linear transport costs a la Hotelling, we show how this hump shape can arise through a combination of intensive and extensive margins of cross-border shopping. Our conclusions are further supported by novel survey evidence and cross-border traffic data.

JEL-codes: D12 F31 L11 L81 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Hump-shaped cross-price effects and the extensive margin in cross-border shopping (2019)
Working Paper: Hump-shaped cross-price effects and the extensive margin in cross-border shopping (2019)
Working Paper: Hump-shaped cross-price effects and the extensive margin in cross-border shopping (2018)
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DOI: 10.1257/mic.20190302

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