Price convergence and purchasing power parity are two important foundations to international trade theory. Yet there is still no consensus on their existence, despite numerous studies. While the debate over price convergence and purchasing power parity continues, the last several years have seen a substantial rise in the use of virtual worlds. Virtual worlds are interactive digital environments where individuals with an internet connection can come together to communicate, cooperate and trade. Virtual worlds create smaller copies of the real world. These copies lack many of the complexities found in the real world. This feature makes virtual worlds a unique setting for studying price convergence and other economic phenomena. This dissertation begins by surveying the extant research on virtual worlds throughout the social sciences to illustrate the usefulness of virtual worlds in economics research. In the second chapter price convergence is tested in one of these virtual worlds. Insight gained from the second chapter is used in the final chapter to alter an existing purchasing power parity model. This altered model is used to estimate the effect transportation costs on purchasing power parity equilibrium.
Level of Degree
Department of Economics
First Committee Member (Chair)
Second Committee Member
Law of One Price, Virtual Worlds, Price Convergence, Purchasing Power Parity
Morrison, Michael. "The Law of One Price and Virtual Worlds." (2013). http://digitalrepository.unm.edu/econ_etds/11