New Brunswick

Strong Cdn. dollar not only reason for U.S. shopping

The strong Canadian dollar isn't the only reason many Maritimers head to Maine on shopping trips — one business professor says higher tariffs and a smaller market are partly to blame.

One business professor says the small Canadian market is another reason we head south to shop

The strong Canadian dollar isn't the only reason many Maritimers head to Maine on shopping trips, says one business professor who gives higher tariffs and a smaller market as other reasons.

Ian Lee, an assistant professor at Carleton University's Sprott School of Business, said that smaller market means less competition.

"Competition drives down prices. We've seen in the cell phone industry, where there's a lack of competition and we pay some of the highest cell phone rates in the world," said Lee.

"There's a direct relation between the degree or intensity of competition and the prices we pay. More competition drives down prices."

Lee said prices on some products have dropped because of online shopping and the ability to compare prices, but not all.

"Textiles, clothing, bedding, pillows, running shoes, specialty equipment, products like hockey equipment. The gap is still 15 to 35 to 50 per cent. It's more difficult to compare the exactly precise product to the U.S. side."

He said that could be seen in large electronics.

Finance Minister Jim Flaherty is calling for a senate committee to look into the price gap and what to do about it.

Lee said reducing tariffs and allowing more competition would help.