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The Balassa–Samuelson effect and pricing-to-market: The role of strategic complementarity

Eddy Bekkers () and Ina Simonovska ()

Economics Letters, 2015, vol. 126, issue C, 156-158

Abstract: Combining Balassa–Samuelson effects with strategic complementarities between prices of tradables and non-tradables yields a novel determinant of tradables’ prices. A larger productivity difference between tradables and non-tradables raises the non-tradables’ price. With strategic complementarities, producers of tradables also increase prices.

Keywords: Strategic complementarity; Relative prices; Tradables; Non-tradables; Balassa–Samuelson effect (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.econlet.2014.12.003

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