A matter of distance? Retailer acceptance of the US dollar in the Canadian plains

• A large majority of Canadian retailers in Saskatchewan and Alberta accept the US dollar in retail transactions.
• We find that distance away from the border is inversely related to the rate of US dollar acceptance in Saskatchewan.
• Canadian retailer sales in US dollars average just above 1% of sales for surveyed firms in Saskatchewan and Alberta.
• Canadian retailers located close to the US border are more likely to earn an exchange rate premium than inland firms.
• More mature Canadian retailers are more likely to accept US dollars in retail transactions than younger firms.

The continued economic integration of North America has connected cross-border shoppers along the US-Canadian border. This paper explores the use of the US dollar in Canadian retail establishments along a geographical spine in Saskatchewan and Alberta, Canada. We find that distance away from the border is inversely related to the rate of US dollar acceptance in Saskatchewan. More important to the acceptance decision, however, is business maturity and provincial location in Saskatchewan.