What is the Price of Tea in China? Goods Prices and Availability in Chinese Cities
33 Pages Posted: 7 Jun 2019
Date Written: March 27, 2019
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: Suggested Citation