Methodology of international prices comparisons

Price comparisons based on exchange rates and purchasing power parities

Technical discussions about which conversion method should be used for international price comparisons in the telecommunications sector have recently become more intense. This page therefore features a selection of scientific studies on this topic.

Extract from the 10th implementation report of the European Union extended to include Switzerland, taking account of purchasing power parity (PPP)

The Commission of the European Communities regularly publishes a report on the current telecommunications situation which appears annually (the “Implementation Report”). In recent years, OFCOM has been extending the EU Implementation Report with corresponding data for Switzerland, applying the methodology of the EU. Since the 8th EU Implementation Report, price comparisons of end-user products have been shown not on the basis of PPP but on the basis of exchange rate conversions. Swisscom has produced a version of the 10th Implementation Report which uses PPP for price comparisons.

This document is available in German only.

International price comparisons: methodology and application to non-tradable goods

In a discussion paper co-financed by Orange, Professor Matthias Lutz (University of St. Gallen) argues that in a comparative analysis and evaluation of efficiency and competitiveness relating to non-tradable goods, the different cost and market structures in the respective countries must be taken into account. The theoretical considerations are illustrated by examples from the tourism and telecommunication sectors in Switzerland.

This document is available in German only.

Which exchange rates should be used in price comparisons in the telecommunications sector?

On behalf of Swisscom AG, professors Thierry Madiès (University of Fribourg) and Jérôme Creel (University of Paris IX Dauphine) examined which exchange rates provide the best results, with reference to the criteria of theoretical foundation, empirical validity, simplicity of calculation and stability. The paper is a theoretical treatment of the different methods used in international price comparisons and takes into account the latest results of economic research.

This document is available in French only.

What effects does the methodology used have on the results of price comparisons?

Since the methodology used in comparative international analyses is seldom discussed, in summer 2003 OFCOM carried out its own analysis.

This study was intended to complement the WIK ('Wissenschaftliches Institut für Kommunikationsdienste') paper.

This document is available in German only.

How should the OECD-PPP methodology to be applied?

In practical terms, the Organisation for Economic Co-operation and Development (OECD) is the leading authority on the methodology of "purchasing power parities" (PPP). The limits and possibilities of their use were outlined by Paul Schreyer (Head of Prices and Outreach Division, OECD Paris) at the spring meeting of the Swiss Statistical Society in Neuchâtel at the end of April 2004.

Specialist staff
Last modification 30.06.2006

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