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The Balassa–Samuelson effect and pricing-to-market: The role of strategic complementarity

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  • Bekkers, Eddy
  • Simonovska, Ina

Abstract

Combining Balassa–Samuelson effects with strategic complementarities between prices of tradables and non-tradables yields a novel determinant of tradables’ prices. A larger productivity difference between tradables and non-tradables raises the non-tradables’ price. With strategic complementarities, producers of tradables also increase prices.

Suggested Citation

  • Bekkers, Eddy & Simonovska, Ina, 2015. "The Balassa–Samuelson effect and pricing-to-market: The role of strategic complementarity," Economics Letters, Elsevier, vol. 126(C), pages 156-158.
    • Handle: RePEc:eee:ecolet:v:126:y:2015:i:c:p:156-158
    DOI: 10.1016/j.econlet.2014.12.003
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    References listed on IDEAS

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    Cited by:

    1. Ina Simonovska, 2015. "Income Differences and Prices of Tradables: Insights from an Online Retailer," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(4), pages 1612-1656.
    2. Lashkaripour, Ahmad, 2020. "Discrete trade," Journal of International Economics, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    Strategic complementarity; Relative prices; Tradables; Non-tradables; Balassa–Samuelson effect;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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