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International pricing with costly consumer arbitrage

Simon Anderson and Victor Ginsburgh

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: Consumer arbitrage affects international pricing in several ways. If all consumers face the same arbitrage costs, a monopolist’s profit increases with arbitrage costs, and world welfare declines with them (if output does not rise). If arbitrage costs differ across consumers, a monopolist may sell in a second country even if there is no local demand—it can use the second country to discriminate across consumers in the first country. Again, world welfare typically falls with arbitrage costs. When there is also local demand in the second country, world welfare may be increasing in arbitrage costs, even if output falls.

Date: 1999-02
Note: FLWIN
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Citations: View citations in EconPapers (22)

Published in: Review of International Economics (1999) v.7 n° 1,p.126-139

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Related works:
Journal Article: International Pricing with Costly Consumer Arbitrage (1999)
Working Paper: International pricing with costly consumer arbitrage (1999)
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