The Balassa–Samuelson effect and pricing-to-market: The role of strategic complementarity
2015
Bekkers, Eddy | Simonovska, Ina
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.
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