Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83460
Authors: 
Schwarz, Jiří
Year of Publication: 
2011
Series/Report no.: 
IES Working Paper 30/2011
Abstract: 
This paper analyzes the role of institutions in price dispersion among cities in the European region in the 1996-2009 period. An overview of the literature on the border effect reveals that the role of institutions is completely neglected. Using the Worldwide Governance Indicators as explanatory variables I find that the better the institutions, the lower the predicted dispersion. The result is robust to different specifications of the regression model and it is consistent with a hypothesis that arbitrage, as an entrepreneurial activity and the main power behind the law of one price, is influenced by institutional quality.
Subjects: 
border effect
price dispersion
price convergence
law of one price
institutional quality
JEL: 
D23
E31
F41
L26
Document Type: 
Working Paper
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