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Price Competition and Market Segmentation in Retail Gasoline: New Evidence from South Korea

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  • Taehwan Kim

    (University of Missouri)

Abstract

I examine price dispersion in retail gasoline and focus on differentiation along the service dimension: full service versus self service. Consistent with more intensive search by self-service customers, I find that price dispersion always decreases with the number of nearby self-service stations, but does not decrease with the number of nearby full-service stations. When I segment the market by brand, I observe that the estimates are sensitive to how brands are separated into different types. These findings show that the market is more clearly segmented by service level than by brand type and also highlight the importance of product differentiation when modeling price dispersion.

Suggested Citation

  • Taehwan Kim, 2018. "Price Competition and Market Segmentation in Retail Gasoline: New Evidence from South Korea," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(3), pages 507-534, November.
    • Handle: RePEc:kap:revind:v:53:y:2018:i:3:d:10.1007_s11151-018-9626-z
    DOI: 10.1007/s11151-018-9626-z
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    Cited by:

    1. Jihoon Lee & Hong Chong Cho, 2021. "Impact of Structural Oil Price Shock Factors on the Gasoline Market and Macroeconomy in South Korea," Sustainability, MDPI, vol. 13(4), pages 1-23, February.

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    More about this item

    Keywords

    Consumer search; Differentiated sellers; Market segmentation; Price dispersion; Retail gasoline; Self service;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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