Cross-Border Price Differentials and Goods Market Integration in East Asia

Abstract

As cross-border movements of goods, capital, and labor are intensifying, it is likely that goods markets in East Asia will become increasingly integrated. This study investigates the current state of goods market integration in East Asia by measuring the extent of cross-border price differentials. Specifically, this study shows that compared with the European Union, East Asian markets are neither sufficiently integrated nor are they showing any price convergence over time.

Keywords: market integration, east asia, cross-border price differentials, price convergence, regionalization, exchange rate fluctuation, income gap

JEL Classification: F15, F36