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Spatial clustering and market power: Evidence from the retail gasoline market

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  • Pennerstorfer, Dieter
  • Weiss, Christoph

Abstract

We investigate the impact of local market power and ‘spatial clustering’ on prices in the retail gasoline market. The acquisition of Aral stations from BP in the Austrian gasoline market in 2003 provides a ‘quasi-experiment’ for identification of the causal effects of changes in spatial clustering on retail prices for a panel of gasoline stations. Our econometric analysis suggests that spatial clustering of gasoline stations reduces the degree of competition between firms and increases equilibrium prices. Merger simulations show that ignoring merger-induced changes in spatial characteristics will lead to a significant bias in the evaluation of merger effects.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 4 ()
Pages: 661-675

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Handle: RePEc:eee:regeco:v:43:y:2013:i:4:p:661-675

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Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Spatial clustering; Gasoline prices; Merger;

References

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Citations

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Cited by:
  1. Dieter Pennerstorfer, 2014. "Price and Quality Competition in Spatial Markets. The Case of Camping Sites," WIFO Working Papers 466, WIFO.
  2. Dieter Pennerstorfer & Franz Sinabell, 2013. "Spatial Price Differentiation and Regional Market Power. The Case of Food-Retailing in Austria," WIFO Working Papers 458, WIFO.
  3. Adriana Nikolic & Christoph Weiss, 2014. "Spatial interactions in location decisions: Empirical evidence from a Bayesian spatial probit model," Department of Economics Working Papers wuwp177, Vienna University of Economics, Department of Economics.

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