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Regional Mc parity: do common pricing points reduce deviations from the law of one price? created by Thomas Y. Mathä

By: Material type: TextTextSeries: Review of World Economics ; Volume 145, number 1London: Sage, 2009Content type:
  • text
Media type:
  • unmediated
Carrier type:
  • volume
ISSN:
  • 16102878
Subject(s): LOC classification:
  • HF1351 REV
Online resources: Abstract: This paper analyses price differences of McDonald’s products in four different countries. I show that pricing at pricing points in different currencies may contribute to explaining deviations from the law of one price. Observing strictly equal prices is more probable if prices are set at psychological and fractional pricing points in a common currency. The latter is also found to reduce the size of price deviations. Additionally, price differences increase as transaction costs increase. Based on this data set there is no evidence that the euro has reduced price deviations.
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Holdings
Item type Current library Call number Vol info Copy number Status Notes Date due Barcode
Journal Article Journal Article Main Library - Special Collections HF1351 REV (Browse shelf(Opens below)) Vol. 145, no. 1 (pages 155-156) SP3242 Not for loan For in house use

This paper analyses price differences of McDonald’s products in four different countries. I show that pricing at pricing points in different currencies may contribute to explaining deviations from the law of one price. Observing strictly equal prices is more probable if prices are set at psychological and fractional pricing points in a common currency. The latter is also found to reduce the size of price deviations. Additionally, price differences increase as transaction costs increase. Based on this data set there is no evidence that the euro has reduced price deviations.

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