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Paying The Price. The Costs Of Fragmented International Markets

Paying The Price. The Costs Of Fragmented International Markets

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Has globalization gone far enough? This study uses the underlying data from Purchasing Power Parity Surveys to estimate the potential benefits from fully integrating goods markets among major OECD countries. These data are particularly useful because every effort has been made to ensure that they are comparable. Input-output tables are used to eliminate distribution margins from final goods prices and thereby provide estimates of ex-factory prices. Price differentials are taken as measures of barriers, and the welfare effects of eliminating these barriers is estimated in a general equilibrium model. The study also provides some insights into the relative openness of individual OECD countries to the world economy, and the degree to which Europe has become a single market

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