Same service done in New York by the same worker is worth X times more than in a small town. Hence people who move their shop suddenly become 10 times more productive, even if they're doing the same thing exactly as efficiently as before.
Then people look at the graphs and say "no wonder these poor places are undeveloped - look how low their productivity is".
It should just be called labor cost and not productivity.
You would think that the effect of the German and French markets would create a local dip in prices in Basel, but it doesn’t seem to be true.
This is currently a problem with digital goods. How can you sell something, like an indie video game, for $1 in India and $10 is the US, and prevent Americans from buying the Indian version? There are online marketplaces that allow people to buy and sell "game keys" for cheap. People in cheap markets can sell local keys for games, at a small markup, to people in expensive markets.
This excludes pricing disparity between (en-US, en-CA, en-GB), (es, es-US, ...) and the like cohorts, but that may not matter too much.
Or, in other words, any strategy of region-locking (even an unsophisticated one like unbundling languages) is going to stymie some legitimate use cases.
I've been studying all night, mom!
Seriously, those who read books in multiple languages as means of language study need to buy each book multiple times and nobody used to find that surprising...
Some online stores just use the Credit Card billing address.
> There have been a lot of very angry Adobe software users in Australia this week as it was discovered retail versions of Creative Suite would carry a massive premium (up to $1,800) over what Adobe charges US users.
> So massive is the difference in fact, it’s been stated you could actually fly from Australia to the US, buy Creative Suite, fly back, and still save money.
The practice of billing address still makes sense.
Some number of European bands I listen to are big enough to have a record deal and distribution in Europe, but for whatever reason their deals do not include US distribution.
Used to be Amazon didn’t enforce this, but now they do. Lucky for me, I found a book seller’s website that doesn’t do credit card checks. Just order the music and put down my address as the Embassy. Pay through the nose for an album because of Swiss prices, but at least I can get the music.
Gotta love when I want to give you money but can’t.
I wish if other stores also does these region sensitive pricing like steam does.
The dilemna for the game producer is that if they let the games sell at the say India price but in all markets, then while brick-and-mortar stores in India may remain viable with such prices stores in other countries might not, AND the game producers want those shops to sell their games.
With iPad games for example there are no B&M stores but there is also the desire to take advantage of income variations by extracting some more margin from higher-earning customers. Regional differences between app markets seem to exist and to be meant to get this extra margin.
If you look at the price of pure products, like barrels of oil, there is little Penn effect.
Only when it's cheaper to do so, and bulk shipping is pretty cheap. So the raw material prices have a cap on how much they can vary, while the location and service costs can have ridiculous differences.
Most trade is pretty free, even without all of it being so.
Now clearly to the employer this is one big market where they have the choice of two similar goods at very different prices. But the two employees are in distinct but overlapping labor markets so they're not going to adjust their own prices.
The employer has a choice of all employees but the reverse is not true. I can't choose to work at a local Ukrainian firm and the other person can't choose to work at a local Silicon Valley firm.
Similarly, Hass avocados from California retail for less in Baltimore than they do in Oakland.