Application of traditional pricing research methods

Date of publication: June 15, 1997

Abstract:

This paper seeks to show, by means of a recent case study, a relatively new field where traditional research methods were applied. We will demonstrate how the data obtained by the effective use of a fairly standard research method was used as hard evidence in what was clearly a very complex dispute. In a broader context, it shows how parties in a trade dispute can use research disciplines to prove or disprove hypotheses and how satisfactory resolutions, unambiguous to all parties involved, can be obtained. The case relates to the European Community’s (EC) assertion that prevailing tax rates pertaining to certain spirits were unfair and applied in such a way that some of the domestically produced spirits enjoyed a competitive advantage through more favorable pricing resulting from lower effective tax rates. Specifically, the EC claimed that the Japanese tax system was discriminatory as it favored a locally produced spirit ‘shochu’ over western-style distilled liquors (whether imported or locally produced) such as vodka, brandy, and whisky.

David McCallum

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Mungo Gilchrist

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