Exaggerated death of distance: Revisiting distance effects on regional price dispersions

Kazuko Kano, Takashi Kano and Kazutaka Takechi

Journal of International Economics, 2013, vol. 90, issue 2, 403-413

Abstract: This paper empirically establishes the significant roles of transport costs in price dispersions across regions. We identify and estimate the iceberg-type distance-elastic transport costs as a parameter of a structural model of cross-regional price differentials featuring product delivery decisions. Utilizing a data set of wholesale prices and product delivery patterns of agricultural products in Japan, our structural estimation approach finds large distance elasticities of the transport costs. The result confirms that geographical barriers are an economically significant contributor to the failures of the law of one price.

Keywords: Law of one price; Regional price dispersion; Transport cost; Geographical distance; Agricultural wholesale price; Sample-selection bias (search for similar items in EconPapers)
JEL-codes: F11 F14 F41 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (31)

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Related works:
Working Paper: Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions (2012)
Working Paper: Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions (2012)
Working Paper: Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:90:y:2013:i:2:p:403-413

DOI: 10.1016/j.jinteco.2013.02.002

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