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N° 2009-21 |
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| September 2009 |
| Spatial Price Discrimination in International Markets |
| Julien Martin |
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| This paper presents a theoretical discussion and an empirical investigation of the impact of distance on
the spatial pricing policy of exporting firms. The theoretical part points out the importance of transport
costs formulation to determine how distance impacts fob prices. Assuming additive or iceberg transport
costs might imply opposite predictions concerning this relationship. The empirical analysis is based on
French export data providing us with bilateral export unit values at the firm and product level. The main
empirical result is that French exporters set higher prices toward the more remote markets. This finding
goes against the predictions of the main models of international trade (with or without quality) predicting either a nil or a negative impact of distance on prices at the firm level. It also questions the use of iceberg
transport costs. A way to reconcile theory with the data is to introduce additive transport costs. |
Non-technical summary  |
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Résumé
non-technique
en français |
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| Full text |
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| Spatial price discrimination; export prices; distance; firm level data |
Keywords |
| F10; F14; L11 |
JEL classification |
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