Borders and Big Macs

Anthony Landry ()

No 95, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: I measure the extent of international market segmentation using local, national, and international Big Mac prices. I show that the bulk of time-series price volatility observed across the United States arises between neighboring locations. Using these data, I provide new estimates of border frictions for 14 countries. I find that borders generally introduce only small price wedges, far smaller than those observed across neighboring locations. When expressing these wedges in terms of distance equivalents, I find that border widths are small in relation to price variations observed across the United States. This suggests that international markets are well integrated.

JEL-codes: F4 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2011
New Economics Papers: this item is included in nep-bec and nep-cba
Note: Published as: Landry, Anthony (2013), "Borders and Big Mac," Economics Letters 120 (2): 318-322.
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Citations: View citations in EconPapers (1)

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Journal Article: Borders and Big Macs (2013)
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