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Why do IKEA's products have different prices in different countries?
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics.
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics.
2012 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

During the past decade, the law of one price and purchasing power parity theories have been empirically tested for their validity. IKEA, as a world famous furnishing company, sells identical products in different countries with different prices. The main emphasis of this paper is placed on the problem of if and why IKEA’s pricing actually departs from the law of one price and purchasing power parity. We focus on the following three main explaining factors: the existence of trade cost, the influences of non-traded parts cost of the goods, and other possible pricing behaviors of the firms. To be able to fulfill our objectives, a regression model combined with the theoretical framework and the institutional framework of IKEA have been used in this paper. The remarkable outcomes are gotten as below: (Ⅰ) The price variation still exist after removing the influences of transportation cost, trade barriers, taxes. (Ⅱ) Higher productivity contributes to higher national prices, but higher labor cost has no significant effect on price variation. (Ⅲ) Price discrimination and special market strategies in specific areas do play a role in the price variation.

Place, publisher, year, edition, pages
2012. , 54 p.
Keyword [en]
IKEA, identical products, price differentials, the law of one price, purchasing power parity
National Category
Economics
Identifiers
URN: urn:nbn:se:lnu:diva-20900OAI: oai:DiVA.org:lnu-20900DiVA: diva2:542036
Subject / course
Economics
Uppsok
Social and Behavioural Science, Law
Supervisors
Examiners
Available from: 2012-08-24 Created: 2012-07-28 Last updated: 2012-08-24Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
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