Publication detail

Impact of Institutions on Cross-Border Price Dispersion

Author(s): PhDr. Jiří Schwarz Ph.D.,
Type: Articles in journals with impact factor
Year: 2012
Number: 0
ISSN / ISBN:
Published in: Review of World Economics, 148(4), 617-645
Publishing place:
Keywords: border effect, price dispersion, price convergence, law of one price, institutional quality
JEL codes: D23, E31, F41, L26
Suggested Citation:
Abstract: This paper analyzes the role of institutions in price dispersion among cities in the European region in the 1996-2009 period. An overview of the literature on the border effect reveals that the role of institutions is completely neglected. Using the Worldwide Governance Indicators as explanatory variables I find that the better the institutions, the lower the predicted dispersion. The result is robust to different specifications of the regression model and it is consistent with a hypothesis that arbitrage, as an entrepreneurial activity and the main power behind the law of one price, is influenced by institutional quality.
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