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Limit price

About: Limit price is a research topic. Over the lifetime, 4865 publications have been published within this topic receiving 148546 citations.


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Journal ArticleDOI
TL;DR: In this paper, car prices in Europe are characterized by large and persistent differences across countries, with Italy and the U.K. systematically representing the most expensive markets, and significant year-to-year volatility is to a large extent accounted for by exchange rate fluctuations and the incomplete response of local currency prices to these fluctuations.
Abstract: Car prices in Europe are characterized by large and persistent differences across countries. The purpose of this paper is to document and explain this price dispersion. Using a panel data set extending from 1980 to 1993, we first demonstrate two main facts concerning car prices in Europe: (I) The existence of significant differences in quality adjusted prices across countries, with Italy and the U.K. systematically representing the most expensive markets. (2) Substantial year-to-year volatility that is to a large extent accounted for by exchange rate fluctuations and the incomplete response of local currency prices to these fluctuations. These facts are analysed within the framework of a multiproduct oligopoly model with product differentiation. The model identifies three potential sources for the international price differences: price elasticities generating differences in markups, costs, and import quota constraints. Local currency price stability can be attributed either to the presence of a local component in marginal costs, or to markup adjustment that is correlated with exchange rate volatility; the latter requires that the perceived elasticity of demand is increasing in price. We find that the primary reason for the higher prices in Italy is the existence of a strong bias for domestic brancs that generates high markups for the domestic firm (Fiat). In the U.K. higher prices are mainly attributed to better equipped cars and/or differences in the dealer discount practices. The import quota constraints are found to have a significant impact on Japanese car prices in Italy, France and the U.K. With respect to local currency price stability, a large percentage of the documented price inertia can be attributed to local costs, and a smaller fraction to markup adjustment that is indicative of price discrimination. Based on these results we conjecture that the EMU will substantially reduce the year-to-year volatility observed in the car price data, but without further measures to increase European integration, it will not completely eliminate existing cross-country price differences.

364 citations

Journal ArticleDOI
TL;DR: In this paper, the authors analyzed the effects of competition on price dispersion in the airline industry, using panel data from 1993:Q1 through 2006:Q3, and found that competition has a negative effect on price discrimination in line with the textbook treatment of price discrimination.
Abstract: We analyze the effects of competition on price dispersion in the airline industry, using panel data from 1993:Q1 through 2006:Q3. Competition has a negative effect on price dispersion, in line with the textbook treatment of price discrimination. This effect is pronounced for routes with consumers characterized by relatively heterogeneous elasticities of demand. On routes with a homogeneous customer base, the effects of competition on price dispersion are smaller. Our results contrast with those of Borenstein and Rose, who found that price dispersion increases with competition. We reconcile the different results by showing that the cross‐sectional estimator suffers from omitted‐variable bias.

364 citations

Journal ArticleDOI
Beat Hintermann1
TL;DR: In this paper, a structural model of the allowance price under the assumption of efficient markets was derived and the extent to which this variation in price can be explained by marginal abatement costs was examined.

363 citations

Posted Content
TL;DR: It is very nearly a truism that the public is wont to confuse changes in the general price level with relative price changes as discussed by the authors, and one might speak of the independence between the two as one of the central postulates of the neoclassical tradition.
Abstract: It is very nearly a truismi amaong neoclassical economists that the public is wont to confuse changes in the general price level with relative price changes. Correspondingl y, one might speak of the independence between the two as one of the central postulates of the neoclassical tradition. William Stanley Jevons was aml-ong the first to identify this basic dichotomin economic life as well as to attempt to explain the ordinary citizen's seenming incapacity to understand it:

362 citations

Journal ArticleDOI
TL;DR: In this article, the authors construct and estimate an oligopoly model to analyze whether international price discrimination can explain the puzzle of why car prices are so different across European countries, and reveal that international price discriminative accounts for an important part of the observed price differences.
Abstract: Why are car prices so different across European countries? I construct and estimate an oligopoly model to analyze whether international price discrimination can explain the puzzle. Three sources of international price discrimination are considered: price elasticities, import quota constraints, and collusion. The data reveal that international price discrimination accounts for an important part of the observed price differences. Low price elasticities (or domestic market power) are present in France, Germany, the United Kingdom, and especially Italy. Binding import quota constraints on Japanese cars exist in France and Italy. The possibility of collusion cannot be rejected in Germany and the United Kingdom.

362 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
20238
202215
20217
202013
201922
201837