TY  - JOUR
AU  - Broda,Christian
AU  - Weinstein,David E.
TI  - Understanding International Price Differences Using Barcode Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14017
PY  - 2008
Y2  - May 2008
UR  - http://www.nber.org/papers/w14017
L1  - http://www.nber.org/papers/w14017.pdf
N1  - Author contact info:
Christian Broda
40 W 57th street
Floor 25th
New York, NY 10019
Tel: 917-214-0301
E-Mail: broda@duquesne.com

David Weinstein
Columbia University, Department of Economics
420 W. 118th Street
MC 3308
New York, NY  10027
Tel: 212/854-6880
Fax: 212/854-8059
E-Mail: dew35@columbia.edu
AB  - The empirical literature in international finance has produced three key results about international price deviations: borders give rise to flagrant violations of the law of one price, distance matters enormously for understanding these deviations, and most papers find that convergence rates back to purchasing power parity are inconsistent with the evidence of micro studies on nominal price stickiness. The data underlying these results are mostly comprised of price indexes and price surveys of goods that may not be identical internationally. In this paper, we revisit these three stylized facts using massive amounts of US and Canadian data that share a common barcode classification. We find that none of these three main stylized facts survive. We use our barcode level data to replicate prior work and explain what assumptions caused researchers to find different results from those we find in this paper. Overall, our work is supportive of simple pricing models where the degree of market segmentation across the border is similar to that within borders.
ER  -