THE LAW OF ONE PRICE: SURVEY OF A FAILURE
Abstract
This paper aims to survey the literature about the Law of One Price in order to document its failure in terms of actual application. After a brief theoretical overview, which starts from classical economists’ thought, the reported literature has been classified on the basis of three main streams: pricing-to-market (also considering investigations about differences between domestic and export prices), national borders, and tradability of goods. Reviewed works have been selected in order to provide a dedicated survey for ‘the Law’, which is absent in previous works about this topic. Therefore, the investigation has been kept intentionally separate from PPP- related debate.
References
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[39] Dixit, A. 1989. Hysteresis, Import Penetration, and Exchange Rate Pass-Through, Quarterly Journal of Economics, 104: 205-228.
[40] Dixon, H., Griffiths, D., and Lawson, L. 2004. Exploring Tradable and Non-Tradable Inflation in Consumer Prices, Statistics New Zealand-Government Department and New Zealand‘s National Statistical Office, mimeo.
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[50] Engel, C. 1999. Accounting for US Real Exchange Rate Changes, Journal of Political Economy, 107: 507- 538.
[51] Engel, C., and Rogers, J. 1996. How Wide is the Border?, American Economic Review 86: 1112-1125.
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[53] Engel, C., and Rogers J. 1999. Violating the Law of One Price: Should We Make a Federal Case out of It?, NBER WP n.7242.
[54] Engel, C., and Rogers, J. 2001. Deviations from Purchasing Power Parity: Causes and Welfare Costs, Journal of International Economics, 55.
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[57] Feenstra, R., Gagnon, J., and Knetter, M. 1996. Market Share and Exchange Rate Pass-Through in World Automobile Trade, Journal of International Economics, 40: 187-207.
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[61] Froot, K., and Klemperer, P.D. 1989. Exchange Rate Pass-Through when Market Share Matters, American Economic Review, 79: 637-654.
[63] Gil-Pareja, S. 2002. Export Price Discrimination in Europe and Exchange Rates, Review of International Economics, Blackwell Publishing, Vol. 10(2): 299-312.
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Published
2010-12-31
How to Cite
BIONDO, Alessio Emanuele.
THE LAW OF ONE PRICE: SURVEY OF A FAILURE.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 1, n. 2, p. 167 - 181, dec. 2010.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/7229>. Date accessed: 27 dec. 2024.
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