Demand and Distance: Evidence on Cross-Border Shopping

Richard Friberg, Marcus Asplund and Fredrik Wilander ()
Additional contact information
Fredrik Wilander: Dept. of Economic Statistics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

No 587, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: While many studies have documented deviations from the Law of One Price in international settings, evidence is scarce on the extent to which consumers take advantage of price differentials and engage in cross border shopping. We use data from 287 Swedish municipalities to estimate how responsive alcohol sales are to foreign prices, and relate the sensitivity to the location’s distance to the border. Typical results suggest that the elasticity with respect to the foreign price is around 0.4 in the border region; moving 200 (400) kilometers inland reduces it to 0.2 (0.1). Given that cross country price differences for alcohol and other products are often caused by taxes, our evidence has implications for the debate on tax competition/harmonization.

Keywords: Law of one price; tax competition; tax harmonization; cross border shopping; European integration. (search for similar items in EconPapers)
JEL-codes: F15 H20 H77 R12 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2005-02-28
New Economics Papers: this item is included in nep-geo and nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Forthcoming in Journal of Public Economics.

Downloads: (external link)
http://swopec.hhs.se/hastef/papers/hastef0587.pdf (application/pdf)

Related works:
Journal Article: Demand and distance: Evidence on cross-border shopping (2007)
Working Paper: Demand and Distance: Evidence on Cross-Border Shopping (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0587

Access Statistics for this paper

More papers in SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Helena Lundin ().