Originally Posted by
Comicwoman
For the McDonald's example, raw material costs may vary between markets. IKEA's wholesale division sells to each country at the same price, with the only difference, I believe to be freight. But again, the prices were set in the first quarter (or so) of a year to be in effect from August to the following July.
OP- BTW, that desk is neat, but the motor can be a problem. Save your receipt. The same desk was discontinued in 2002 or 2003. Almost got one because it was so cheap, but really had no use for it Reason won.
While it is true what you say, this is still not a good price index for the country itself.
I'm Swedish and I have several classmates from college who work at IKEAs HQ at Elmhult just a 2 hour drive from here. They allow far greater freedom on the regional (ie by country) divisions to put up prices for their products because of local trends and fashions. Something that The Big Mac index is rather immune to.
Also it's a well known phenonomen how norwegians come in droves over the border to Sweden to stock up on groceries, spirits, brand clothing etc. There are entire research papers dedicated to it.
http://www.bygdeforskning.no/dynamis...ER%2003.05.pdf