A study conducted by the Bank of Montreal showed that prices in the U.S. are between 15% and 30% lower than in Canada! This is no big surprise, with the internet I can buy books at Amazon (for my Ipad) that are at least 20% cheaper than if I bought them from the Canadian equivalent.
But the best one yet relates to Quebec’s based SAQ (Quebec’s liquor store monopoly). A few months ago they purchased a high end U.S. distributor, and the same bottle of wine in the U.S. sells for 28% less than in Quebec. When confronted with this fact, the PR person (soon to be unemployed if there is any justice) argued that the SAQ has a wider mission, to generate additional revenues for the Government -- really this person said that to a journalist from the Montreal based French newspaper “La Presse”. Truth of the matter, the SAQ is now stating that as a monopoly it has an OBLIGATION to rip-off its customers.
There used to be a thriving business in Canada of buying cars in the U.S., especially luxury models, at a very steep discount to what you would pay in Canada. A friend bought a BMW X5 and saved more than $30k – the car was literally 30% cheaper in the U.S (with higher specs). This trade is now more or less dead, as car prices in Canada and the U.S. are almost identical. Still if you’ve ever bought shoes in Burlington (Vermont) you must wonder why the same pare is nearly double in Montreal…
A few months ago I purchased a new showerhead, using a U.S. distributor reduced my purchase price by more than 50%. If I were able to purchase a heat pump in Vermont it would cost less then 40% of what the same machine (I know I checked) in Montreal. Less competition I guess, importers with near monopoly position that are able to extract economic rent. My guess is that increasingly Canadians will turn to the internet for their shopping as the price differential is wide enough to justify action.
The report by BMO outlines something that Canadians have known for many years, the internet was not an option a few years ago – and with NAFTA the only duties you have to pay are taxes (not an issue in any of the discussions we’re having here by the way). I always check on the internet before I buy. My guess is that once Amazon comes to Canada (for things other than books) Main Street will suffer.