<blockquote>
  <p>What are the mechanisms that justify large price differences between
  different countries (3x ratios or more) ?</p>
</blockquote>

<p>Absent any concrete examples where that actually occurs, I can think of some factors that might make sense of the <em>hypothetical</em> disparities.</p>

<p>A government might impose <em>taxes/tariffs on imports</em>, including digital goods. Providers of a digital good will not absorb those taxes and tariffs. Instead, providers will pass them to the consumer, especially if those providers have access to other (international and/or domestic) markets.</p>

<p>The level or intensity of <em>competition</em> might vary per country. Strong competition could prompt a provider to set lower prices in economies where his market share is at risk or reduced.</p>

<p>In the case of digital services, there might be costs associated with <em>customizing</em> them to consumers in a foreign economy. Consider the hypothetical situation of a German company offering a digital service to consumers in Spain. Since a large sector of Spain's population only speaks Spanish, the German company might need to hire Spanish speakers for customer support. The resulting, additional cost should be reflected only in the pricing for Spain, lest the company lose market share in the other economies.</p>

CC BY-SA 4.0
2018-07-24T18:05:14.040Z
2018-07-24T18:05:14.040Z
Iñaki Viggers
<p>Provided the network infrastructure costs the same for the seller (if things going on with net neutrality weren't to effect that), certainly considering the fact that an average citizen of a given "low average $ income" country would have less money available for digital products than say someone from Germany or U.S.A.</p>

<p>What are the mechanisms that justify large price differences between different countries (3x ratios or more) ?</p>

<p>Edit: Thanks for your answers.
As real life examples, what struck me is any app here <a href="https://steamdb.info/apps/" rel="nofollow noreferrer">https://steamdb.info/apps/</a> but as you suggested it applies for various digital goods on amazon and other sellers.</p>

CC BY-SA 4.0
2018-07-24T15:23:44.927Z
Could you provide specific examples where that disparity happens?
Iñaki Viggers
CC BY-SA 4.0
2018-07-26T11:14:31.027Z
What sort of answer are you looking for?  The term 'justify' suggests you may be looking for something different from an explanation.  Are you, for example, asking whether the price differences could be justified as raising overall welfare?
Adam Bailey
CC BY-SA 4.0
2018-07-26T15:38:23.090Z
English isn't my native language, so please forgive the lack of accuracy with words, I simply meant it as "explaining" why the prices difference, and as mechanisms so that I could easily understand it. An advanced economic answer I couldn't comprehend, I'm a lambda human :)
user18938
<currency>
Does only "supply/demand" rule justify different prices for a digital good?
user18938
# Does only "supply/demand" rule justify different prices for a digital good?

(Asked by: username_0 on 2018-07-24)

Provided the network infrastructure costs the same for the seller (if things going on with net neutrality weren't to effect that), certainly considering the fact that an average citizen of a given "low average $ income" country would have less money available for digital products than say someone from Germany or U.S.A.

What are the mechanisms that justify large price differences between different countries (3x ratios or more) ?

Edit: Thanks for your answers.
As real life examples, what struck me is any app here <https://steamdb.info/apps/> but as you suggested it applies for various digital goods on amazon and other sellers.

**Tags:** currency

> **Comments:**
> **username_1**: Could you provide specific examples where that disparity happens?  
> **username_2**: What sort of answer are you looking for?  The term 'justify' suggests you may be looking for something different from an explanation.  Are you, for example, asking whether the price differences could be justified as raising overall welfare?  
> **username_0**: English isn't my native language, so please forgive the lack of accuracy with words, I simply meant it as "explaining" why the prices difference, and as mechanisms so that I could easily understand it. An advanced economic answer I couldn't comprehend, I'm a lambda human :)  

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## 1 answers

### Answer by username_1 on 2018-07-24. Score: 1

> What are the mechanisms that justify large price differences between
> different countries (3x ratios or more) ?

Absent any concrete examples where that actually occurs, I can think of some factors that might make sense of the *hypothetical* disparities.

A government might impose *taxes/tariffs on imports*, including digital goods. Providers of a digital good will not absorb those taxes and tariffs. Instead, providers will pass them to the consumer, especially if those providers have access to other (international and/or domestic) markets.

The level or intensity of *competition* might vary per country. Strong competition could prompt a provider to set lower prices in economies where his market share is at risk or reduced.

In the case of digital services, there might be costs associated with *customizing* them to consumers in a foreign economy. Consider the hypothetical situation of a German company offering a digital service to consumers in Spain. Since a large sector of Spain's population only speaks Spanish, the German company might need to hire Spanish speakers for customer support. The resulting, additional cost should be reflected only in the pricing for Spain, lest the company lose market share in the other economies.


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