[chime]

It's related to Purchasing Power Parity [1] and a good example of that is the Big Mac Index [2]. Basically, even if you adjust for exchange rate, the same amount of currency can buy 2 apples in one country and 4 in another. This should not be possible in a globalized market because of the Law Of One Price [3]. However, that only really applies in the long term, for buyers with perfect information (i.e. full knowledge of all price/quantity options), and for goods that are tradable. Land is not tradable internationally. You can't just move 1000 sq ft. from Argentina to US. Same with labor e.g. people who speak a specific language or perform a specific skill. Add to that local taxes, transportation, and energy costs and you can see why the same apple costs more in a different place.

Gas stations next to each other but divided by a state line in the US have different prices. Taco Bell sells the same burrito for different prices. The same factors apply internationally too, nothing to do with exchange rate.

Hope this was as ELI5 as necessary for HN-level discussion.

https://en.wikipedia.org/wiki/Purchasing_power_parity https://en.wikipedia.org/wiki/Big_Mac_Index https://en.wikipedia.org/wiki/Law_of_one_price

[idontpost]

> Gas stations next to each other but divided by a state line in the US have different prices

Hell, gas stations divided by a street have different prices. In one case I saw, the one you could see from the freeway was +$0.50 per gallon compared to the one you couldn't see from the freeway.

[Drdrdrq]

Interestingly enough, I have seen gas stations very close to each other with very different prices. This was close to an airport so I assume the idea is to rip off tourists who don't have time to search for cheapest fuel before returning the rented cars. At least that was the only explanation I could find that didn't involve conspiracy theories (Catania, Sicily, Italy).