Cross-Country Relative Price Volatility: Effects of Market Structure
CESifo, Munich, 2005
CESifo Working Paper No. 1456
![](https://cesifo.org/DocImg/cesifo1_wp1456.jpg?c=1689236883)
Using annual data on nine manufacturing sectors of eighteen OECD countries, the article studies the implications of market structure for cross-country relative price variability. It is found that, in accordance with predictions from a standard markup pricing model, reductions in market competition, along with increased nominal exchange rate volatility, are associated with greater variability of cross-country relative prices. The market structure also has similar effects on components of cross-country relative price variability. The empirical findings are robust to the inclusion of various control variables and alternative sample specifications.