![Sample our Law journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5942/TOC-Subject-Sample-2021-Law.jpg"})
Abstract
The continued economic integration of North America has connected cross-border shoppers along the US-Canadian border. This paper explores the use of the US dollar in Canadian retail establishments along a geographical spine in Saskatchewan and Alberta, Canada. We find that distance away from the border is inversely related to the rate of US dollar acceptance in Saskatchewan. More important to the acceptance decision, however, is business maturity and provincial location in Saskatchewan.
Notes
The authors would like to thank Oleksandra Kravets for research assistance and the Johnson-Shoyama Graduate School for research support. The authors also thank three anonymous reviewers for their helpful comments and suggestions. We believe the paper is much improved because of their insights, however, the remaining errors are ours alone.
1 Johnson-Shoyama Graduate School of Public Policy, 110-2 Research Drive, Innovation Place, University of Regina, Regina, SK, Canada S4S 7H1. Tel.: +1 306 585 4482.
2 Population figures are for 2010 and are found at: http://www.citypopulation.de/Canada.html.
3 As one reviewer noted, the degree of acceptance between the authors’ earlier study in Canada, albeit in a different region and focused solely on border communities, and the present study may also be a reflection of the change in the exchange rate where the Canadian dollar had strengthened considerably from 2004/2005 to the present 2012 study. As such, the US dollar may not be as desirable to hold for Canadian retailers over this period. This may indeed explain in part some willingness to retailer participation in currency substitution, though our present survey did not inquire specifically into this possibility—perhaps a research topic to be explored in the future. Regardless, Canadian retailers overwhelming accept US dollars in retail transactions.
4 The results are as follows: closer to the border by distance, ANOVA, F = 2.880, p = .095; closer to the border by city location, Pearson Chi-square = 12.808, df = 3, p = .005; and province, Alberta compared to Saskatchewan, Pearson Chi-square = 9.240, df = 1, p = .003. Additionally, the calculated Canadian dollar premium per US dollar for each community is as follows: Estevan = 0.0012; Lethbridge = 0.0225; Regina = −0.0088; and Saskatoon = −0.0061 (ANOVA, F = 4.700, p = .005).
5 We thank an anonymous reviewer for pointing out the possibility of price discrimination emanating from the retailer constructed exchange rate.
6 This calculation is based upon the total 2012 retail sales realized in Alberta and Saskatchewan of 86.6 billion dollars, converted to US dollars, derived from Statistics Canada, “Retail trade, by province and territory” at: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trad17a-eng.htm. Additionally, retail trade segment percentages for food and beverages, gasoline stations, clothing stores, and general merchandize stores were obtained through Statistics Canada for Alberta and Saskatchewan. For the latest available year, these retail segments comprise 50.9% and 52.8% of 2011 retail trade in Alberta and Saskatchewan, respectively, see “Retail trade, operating statistics, by province and territory” at: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trad38i-eng.htm and http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trad38j-eng.htm.
7 The division between local and non-local firms, an aggregation of regional, national and international firms, indicates a significant difference in the acceptance decision (cross-tabulation: Pearson Chi-square = 3.216, df = 1, p = .073). That is, non-local firms are more likely to accept US dollars than local firms.
8 We thank an anonymous reviewer for suggesting the presence of this learning outcome.
9 The proportional chance criterion is calculated as CPRO = p2 + (1 − p)2 where p is the proportion of subjects in one group. In this model CPRO = .664 and 1.25 times CPRO is 83.0%. The model estimates well, with a hit ratio of 83.1%.
10 This additional analysis was suggested by a reviewer to uncover possible provincial differences. Besides a significant difference between provinces, years in the community also remained a significant predictor of acceptance where each additional year a retailer was in business increased the odds of accepting the US dollar by 4.4%. The remainder of logistic regression remained virtually unchanged. We thank this reviewer for this suggestion.
11 The model diagnostics appear at the bottom of the table. All are within acceptable ranges with the proportional chance criterion just under the 1.25 times chance mark, 81.4% versus 83.0%.
12 There is a tax differential between Saskatchewan and Alberta. Retailers in both provinces are required to collect the general sales tax of 5% which goes to the Canadian federal government. Saskatchewan retailers also collect an additional provincial sales tax of 5%, Alberta retailers do not. As such, consumers pay 5% higher total sales tax in Saskatchewan because of the additional provincial sales tax. This 5% differential, however, probably did not have an impact of US dollar acceptance, and perhaps usage, between the provinces as indicated in our logistic regression results. A survey of US consumers using the US dollar in Canada would prove or disprove the sales tax differential as an inducement to utilize US dollars in one province or the other. Perhaps this is a topic for further study.
13 An additional analysis aggregating regional, national, and international firm type did not change the findings.
14 As suggested by an anonymous reviewer, additional estimations pairing Saskatoon with the three other cities of Estevan, Lethbridge, and Regina were also undertaken. No model results were significant, though there was an indication that regional firms were much less likely to accept US dollars in Regina than in Saskatoon.