The AEA is providing open access to all journal content on the AEA website through August 2020 to overcome any difficulties some may have accessing library subscriptions during these challenging times.
The AEA is providing open access to all journal content on the AEA website through August 2020 to overcome any difficulties some may have accessing library subscriptions during these challenging times.
This paper examines the effect of cross-border shopping on grocery demand in Norway using monthly store X category sales data
from Norway's largest grocery chain 2012-2016. The sensitivity
of demand to the foreign price is hump-shaped and greatest 30-60
minutes' driving distance from the closest foreign store. Combining continuous demand, fixed costs of cross-border shopping and
linear transport costs à la Hotelling we show how this hump-shape
can arise through a combination of intensive and extensive margins
of cross-border shopping. Our conclusions are further supported by
novel survey evidence and cross-border traffic data.
