Nonparametric Identification and Estimation of the Number of Components in Multivariate Mixtures

Kazuko Kano, Takashi Kano and Kazutaka Takechi

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This study investigates the effect of distance on price differentials across regions. To identify the distance effect, we need to incorporate producer heterogeneity and pricing-to-market behavior. Because geographic barriers alter the threshold levels of productivity to set a positive price across markets, the effect of distance on price differentials can be underestimated if heterogeneity and pricing to market are not accounted for. By incorporating these factors, empirical analysis using micro-level data reveals that the distance effect is significantly large, suggesting that the price of geographic barriers is still high for regional transportation.

Keywords: law of one price; transportation costs; geographic barriers; producer heterogeneity; pricing to market (search for similar items in EconPapers)
JEL-codes: F11 F14 F41 (search for similar items in EconPapers)
Date: 2012-10
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