I understand why the prices of console games around the world is different due to the fact that shipping can bring up the price.
However, for digital distribution through steam and other online game retailers shouldn't the prices around the world be the same, or converted to other currencies exactly, because no physical item (besides electrons) are being exchanged.
I'm guessing there's more to it that i see but i'd love to see what you guys/gals think....
It depends on your countries trade laws. For most countries there's a fee to bring any import in unless its declared 'free trade' or the like.
Game publishers have a say at what they want to charge a certain country or whether they want to sell to that country based on what localization they want to put into the game. Steam by itself cannot dictate what price a game made by another devs and/or publishers. The only thing steam requires is a fee or certain % of a game sale to cover themselves and provide a download location and hosting.
A lot market analysis goes into what a game can sell for in other markets. They ask themselves, what will the market bare and what does everyone else do?
There is more to it, your right, at what the 'cost' is and what the 'price' is to what a game is made and bought at.