Editing Balassa–Samuelson effect (section)

===Empirical "Penn Effect"===
By the [[law of one price]], entirely [[tradable]] goods cannot vary greatly in price by location because buyers can [[arbitrage|source from the lowest cost]] location. However, most [[Service (economics)|service]]s must be delivered locally (e.g. [[hairdressing]]), and many manufactured goods such as furniture have high transportation costs or, conversely, low value-to-weight or low value-to-bulk ratios, which makes deviations from the law of one price, known as [[purchasing power parity]] or PPP-deviations, persistent. The Penn effect is that PPP-deviations usually occur in the same direction: where incomes are high, [[Consumer Price Index|average price levels]] are typically high.