Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 587:
Demand and Distance: Evidence on Cross-Border Shopping

Richard Friberg (), Marcus Asplund () and Fredrik Wilander ()

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 locationís 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.; (follow links to similar papers)

JEL-Codes: F15; H20; H77; R12; (follow links to similar papers)

23 pages, February 28, 2005

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

hastef0587.pdf    PDF-file (283kB) 
Download Statistics
This paper is forthcoming as:
Friberg, Richard, Marcus Asplund and Fredrik Wilander, 'Demand and Distance: Evidence on Cross-Border Shopping', Journal of Public Economics.

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:hastef:0587 This page was generated on 2014-12-14 19:23:06