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Market Concentration and Product Variety under Spatial Competition: Evidence from Retail Gasoline

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Author Info
Georg Götz ()
Klaus Gugler ()

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Abstract

We show that for a spatially differentiated economy reduced product variety is the likely outcome of mergers except in cases where exit costs in relation to (outlet specific) fixed costs are high. Our empirical analysis of the Austrian retail gasoline market confirms that increases in concentration reduce product variety. Ignoring this product variety effect is likely to lead to an underestimate of market power in structural merger analysis. Copyright Springer Science + Business Media, LLC 2006

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File URL: http://hdl.handle.net/10.1007/s10842-006-0025-z
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Publisher Info
Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 6 (2006)
Issue (Month): 3 (December)
Pages: 225-234
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:jincot:v:6:y:2006:i:3:p:225-234

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Web page: http://springerlink.metapress.com/link.asp?id=105724

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords: spatial product differentiation; retail gasoline; mergers; concentration; L11; L13; L90;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. John S. Heywood & Kristen Monaco & R. Rothschild, 2001. "Spatial Price Discrimination and Merger: The N-Firm Case," Southern Economic Journal, Southern Economic Association, vol. 67(3), pages 672-684, January.
  2. Ivaldi, Marc & Verboven, Frank, 2001. "Quantifying the Effects from Horizontal Mergers in European Competition Policy," CEPR Discussion Papers 2697, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Gerhard Clemenz & Klaus Gugler, 2006. "Locational choice and price competition: some empirical results for the austrian retail gasoline market," Empirical Economics, Springer, vol. 31(2), pages 291-312, June. [Downloadable!] (restricted)
  4. Evans, William N & Froeb, Luke M & Werden, Gregory J, 1993. "Endogeneity in the Concentration-Price Relationship: Causes, Consequences, and Cures," Journal of Industrial Economics, Blackwell Publishing, vol. 41(4), pages 431-38, December. [Downloadable!] (restricted)
  5. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring. [Downloadable!] (restricted)
  6. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-42, March.
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  7. Severin Boreinstein & Andrea Shepard, 1996. "Dynamic Pricing in Retail Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 429-451, Autumn. [Downloadable!] (restricted)
    Other versions:
  8. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier. [Downloadable!] (restricted)
  9. Martinez-Giralt, Xavier & Neven, Damien J, 1988. "Can Price Competition Dominate Market Segmentation?," Journal of Industrial Economics, Blackwell Publishing, vol. 36(4), pages 431-42, June. [Downloadable!] (restricted)
  10. Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, vol. 70(3), pages 1111-1153, May. [Downloadable!] (restricted)
  11. Steven T. Berry & Joel Waldfogel, 2001. "Do Mergers Increase Product Variety? Evidence From Radio Broadcasting," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 1009-1025, August. [Downloadable!] (restricted)
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