|
|
Article: Research reports from G. Alessandria and co-authors provide new insights into international economics.
- Article from:
- Economics Week
- Article date:
- August 14, 2009
CopyrightCOPYRIGHT 2009 NewsRX. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
According to recent research from the United States, "This article develops a model of consumer search consistent with the evidence of substantial price dispersion and time spent shopping within countries to study international deviations from the law of one price (LOP) and relative price fluctuations."
"Search frictions lead firms to price discriminate across markets based on the opportunity cost of search, which depends on the local wage. With productivity and taste shocks estimated from the data, deviations from the LOP are as volatile and persistent as in the data," wrote G. Alessandria and colleagues.
The researchers concluded: "Fluctuations in ...