New Zealand is not a cheap place to live – for a lot of reasons.

We’re far from a lot of major markets, so shipping goods here can be expensive.

New Zealand’s small size means that wholesale distribution can rarely achieve the economies of scale available in larger markets, so it can often be cheaper to ship single items to New Zealand using New Zealand Post’s YouShop service than buying things here – despite high shipping costs.

The 15% GST difference is often only a small fraction of the cost difference between buying locally and shipping from abroad.

And it also does not help that companies such as Ikea seem to have put New Zealand into the “too hard” basket. Its attempts at opening here were shot down.

Despite promises that it’s now harder to use the Resource Management Act to block competitors’ opening, there have only been rumours of potential new Ikea entry attempts. If a whole city needing new furniture four years ago wasn’t enough to bring Ikea here, count me as a pessimist.

Finally, ridiculously high land costs caused by regulatory restrictions on urban land use push up the price of everything.

Thankfully, our excellent parallel importation regime helps to mitigate those problems. It is hard for New Zealand prices to stay too far out of line from international norms when consumers can ship in goods from abroad.

But what about cases where none of that should matter? Where shipping costs don’t exist, where size doesn’t matter, where land costs cannot affect prices and where there are no regulatory barriers to entry?

Having butted up against The Economist’s subscription gateway rather a few times, I thought it might finally be time to subscribe. The cheapest online-only digital subscription on offer, the three-year one, tallied $1020, or $6.67 per week.

Dropping a grand on a magazine subscription seemed a little extravagant, so I explored the “Change Country” button on the website. The best offer available in Canada, a two-year digital subscription, worked out to $C2.12 per week, or about $2.26.

Flipping through some of the available country options, I found only Australia topped New Zealand’s cost. Forget The Economist’s heralded Big Mac index that assesses whether currencies are over- or under-valued based on the local cost of a standard hamburger; we can build an Economist Index using local prices of digital editions of The Economist!

How could it be that an entirely digital product, with identical delivery costs for Canadians and Kiwis, costs three times as much in New Zealand?

While long-term international magazine subscriptions also act as a bit of a currency hedge, it is simply not plausible that currency risk adds an extra 200% margin on top of the Canadian price.

More compellingly, digital subscriptions can cannibalise print sales. The print edition in Canada is the same price as the Canadian digital edition; the New Zealand print edition costs as much as the New Zealand digital edition.

So a Canadian-priced New Zealand digital edition might cannibalise print sales. But this is somewhat question-begging: if the local print price is higher because costs here are higher, why hasn’t The Economist encouraged a shift to higher-margin digital editions? And if the local print edition in New Zealand has higher margins than elsewhere, that too would need explaining.

The simple answer is price discrimination. If readers in New Zealand are willing to pay more for subscriptions to The Economist than are readers in Canada, then prices will vary across markets – unless there is a way for consumers in the cheaper market to onsell to those in the pricier markets, or for those in the expensive markets to pretend to be in the cheaper market.

New Zealand is a small trading nation where keeping abreast of international trends is important for a larger swath of the business community than is the case in places with larger domestic markets. That requires not only a subscription to the NBR but also, probably, one of a handful of other publications – including The Economist.

While price discrimination is not particularly nice for those with a high willingness-to-pay for content, it does help to ensure better products are produced and that more people in total have access to that content.

But it is galling that a relatively poor place, like New Zealand, helps to subsidise the base costs of producing The Economist’s content for richer Americans, Brits and Canadians.

Fortunately, The Economist’s price discrimination is even finer grained. Those who find $1000 for a magazine subscription to be on the appalling end can easily use an American or Canadian address to access the foreign subscription price; those who find the price to be just fine don’t bother checking the foreign rates.

The potential for parallel importation helps to keep costs down for Kiwis who are a bit more price sensitive. PriceSpy makes small-market electronics retail more competitive. YouShop helps Kiwis access a broader range of goods where American retailers often do not want the hassles of international shipping. And our reasonable taxation regime maintaining a high threshold for applying GST on imported goods helps to make it all feasible: proposed alternatives for collecting tax at the border simply make it too hard for consumers to import goods from abroad.

Price discrimination does not work when consumers in the higher-cost market can easily access the lower-cost market. New Zealand’s parallel importation regime helps to break international price discrimination that too often works to the detriment of Kiwi consumers.

I have not seen any study on it. But I would be willing to bet that New Zealand’s parallel importation regime has done more to help Kiwi consumers than has anything that the Commerce Commission has ever done. It is very likely our most effective competition-enhancing institution.

And so beware of local interest groups that would weaken that regime by, for example, making consumer imports too much of a tax hassle. But watch too for international agreements that would have governments enforce international price discrimination arrangements.

If the final text of the TPPA breaks parallel importation, it will not be a deal worth signing – not least of which because it would make it illegal for this Canadian, resident in New Zealand, to choose the Canadian pricing option when signing up for The Economist.