Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions

Kazuko Kano, Takashi Kano and Kazutaka Takechi
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Kazutaka Takechi: Hosei University

No CARF-F-231, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

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 dierentials 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.

Pages: 30 pages
Date: 2010-10, Revised 2012-05
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https://www.carf.e.u-tokyo.ac.jp/old/pdf/workingpaper/fseries/241.pdf (application/pdf)

Related works:
Journal Article: Exaggerated death of distance: Revisiting distance effects on regional price dispersions (2013)
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 (2010)
Working Paper: Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions (2010)
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