Price dispersion across countries and the heterogeneous impacts of income differences

•I use online prices across countries to analyze the deviations from Law of One Price (LOP).•The deviations from LOP are relatively smaller for higher-priced products.•Income difference across countries is one reason for the price dispersions.•The impacts of income difference on price dispersions are smaller for higher-priced products.

Using price information about thousands of identical products sold across over 70 countries, I show that the deviations from Law of One Price (LOP) are substantial, and relatively smaller for higher-priced products. In addition, I find that income difference across countries is one reason for the price dispersions, and its impact is smaller for higher-priced products.