Final Word from Tuesday, December 11, 2007
If Czechs have to pay German prices for electricity, why shouldn't they also get to pay German prices for groceries, electronics and clothing? It used to be that Germans would visit the CR to do their shopping, but now it's the other way around. The CR has become an expensive country, and this is a monumental shift. Only part of the reason the grass is now greener on the other side is due to the sharp rise in the crown vs. the euro. Other reasons are low competition in the CR (in some areas) and high bureaucratic barriers. These aren't going to improve overnight. In the meantime, there's a big arbitrage opportunity that's only partially being used. Not everyone can jaunt across the border to do the weekly shopping. As prices rise even further next year, Czechs will be more receptive than ever to entrepreneurial ventures that are able to reduce the price disparity with neighboring countries.[Czech Republic Poland Austria Germany currency rates ČEZ]