What is the Price of Tea in China? Goods Prices and Availability in Chinese Cities

33 Pages Posted: 7 Jun 2019

See all articles by Robert C. Feenstra

Robert C. Feenstra

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Mingzhi Xu

Peking University - Institute of New Structural Economics

Alexis Antoniades

Georgetown University School of Foreign Service in Qatar

Date Written: March 27, 2019

Abstract

We examine the price and variety of a sample of consumer goods at the barcode level in cities within China. Unlike the United States, in China the prices of goods tend to be lower in larger cities. We explain that difference between the countries by the more uneven spatial distribution of manufacturers’ sales and retailers in China, and we confirm the pro-competitive effect of city size on reducing markups there. In both countries, there is a greater variety of goods in larger cities, but that effect is more pronounced in China. Combining the lower prices and greater variety, the price indexes in China for the goods we study fall with city size by around seven times more than in the United States.

Keywords: Retail prices, Multi-product firms, Pro-competitive effect, Spatial price difference, Cost-of-living

JEL Classification: E01, F11, L1

Suggested Citation

Feenstra, Robert C. and Xu, Mingzhi and Antoniades, Alexis, What is the Price of Tea in China? Goods Prices and Availability in Chinese Cities (March 27, 2019). Available at SSRN: https://ssrn.com/abstract=3361233 or http://dx.doi.org/10.2139/ssrn.3361233

Robert C. Feenstra (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
916-752-9240 (Phone)
916-752-9382 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Mingzhi Xu

Peking University - Institute of New Structural Economics ( email )

Bejing, AK Bejing
China

Alexis Antoniades

Georgetown University School of Foreign Service in Qatar ( email )

Education City
Al Huqoul St
Doha
Qatar

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