Explaining Prices in the Global Economy

This ground-breaking book addresses the problem of price disparities across countries and, for the first time, uses market structures as the central focus. The author also addresses the effects of trade barriers, input-output relations and economies of scale, factors often ignored by other studies, to determine what causes prices to vary across countries.A post-Keynesian markup pricing model incorporating market power, intermediate inputs and productivity differences is developed and tested using regression analysis. New data on sectoral price levels in Japan and the Republic of Korea and data on GDP and investment price levels for a large number of countries are used. The empirical evidence shows that wages, labor productivity, market power and economies of scale are the most important variables for the explanation of differing price levels across countries. The author finds little evidence for the importance of policy-induced trade barriers and competition policy in explaining this.This book will be useful for scholars of post-Keynesian economics and international economics.