Unless otherwise defined, the convergence of prices for goods and services in a common currency area, especially in the euro area. – In a common market, the prices of similar, internationally tradable goods must actually be the same at different locations, since otherwise risk-free profits can be achieved via arbitrage transactions; in this case, the good is purchased at the cheapest location and sold at a profit at the most expensive location. In this way, price differences are leveled out by market forces. – However, if price differences do occur in the euro area, they are a signal to investigate the causes, such as national market interventions. – See Price dispersion. – Cf. Monthly Report of the Deutsche Bundesbank, March 2009, pp. 35 ff (detailed presentation; overviews; references).
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