Abstract
It is well documented that retail prices in Japan are higher than in other countries for similar products. The two main competing explanations for this finding are: (1) a relatively high degree of discriminatory practices against imports and (2) relatively high distribution costs associated with getting goods to the point of final sale in Japan. The first explanation implies that foreign exporters should charge higher prices on shipments to Japan, provided at least some of the rent associated with restrictive practices can be captured by the exporter, while the second does not. For the 37 seven-digit German export categories studied here, the 1975-87 data are inconsistent with the view that higher distribution and retail costs explain all of the retail price differential. Prices on shipments to Japan appear to be significantly higher than prices on shipments to the United States, the United Kingdom, and Canada, controlling for exchange rate and income changes in the destination markets.
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