TY  - JOUR
AU  - Haskel,Jonathan
AU  - Wolf,Holger
TI  - The Law of One Price - A Case Study
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8112
PY  - 2001
Y2  - February 2001
UR  - http://www.nber.org/papers/w8112
L1  - http://www.nber.org/papers/w8112.pdf
N1  - Author contact info:
Jonathan Haskel
Imperial College Business School
Tanaka Building
South Kensington Campus
London SW7 2AZ
ENGLAND
Tel: +44 (0)20 7594 8563
Fax: +44 (0)20  7594 5915
E-Mail: jonathan.haskel@tuck.dartmouth.edu

Holger C. Wolf
Center for German and European Studies
ICC-503
School of Foreign Service
Georgetown University
Washington, DC  20057
Tel: 202/687-8079
Fax: 202/687-8359
E-Mail: moneyhist@aol.com
AB  - We use retail transaction prices for a multinational retailer to examine the extent and permanence of violations of the law of one price (LOOP). For identical products, we find typical deviations of twenty to fifty percent, though there is muted evidence for convergence over time. Such differences might be due to differences in local costs. If so, relative prices of similar products (round versus square mirrors) should be equal across countries. In fact, relative prices vary significantly across very similar goods within a product group; indeed, the ordering of common currency prices often differs for similar products. The finding suggests that differences in local distribution costs, local taxes, and probably tariffs do not explain the price pattern, leaving strategic pricing or other factors resulting in varying markups as alternative explanations for the observed divergences.
ER  -