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Buy Here, or Keep Driving? The Effect of Geographic Market Density on Retail Gas Prices

Author

Listed:
  • Amy Schultheis

    (Accountant Assistant, Family Office Executive, TimBer LLC, Denver, CO 80202.)

  • Daniel N.K. Johnson

    (Schlessman Professor of Economics, Colorado College, Colorado Springs, CO 80903, Tel (719)389-6654.)

  • Kristina M. Lybecker

    (Associate Professor of Economics, Colorado College, Colorado Springs, CO 80903.)

  • Devin Nadar

    (Senior Product Innovation Associate, Athenahealth, Watertown, MA 02472.)

Abstract

This paper examines whether the presence of local competitors affects the retail price of gasoline in mid-sized American cities. Spatial regression analysis permits an answer that is clear of potentially confounding statistical problems. Results continue to show small impacts of local competition, especially compared to other factors.

Suggested Citation

  • Amy Schultheis & Daniel N.K. Johnson & Kristina M. Lybecker & Devin Nadar, 2016. "Buy Here, or Keep Driving? The Effect of Geographic Market Density on Retail Gas Prices," Journal of Business, LAR Center Press, vol. 1(1), pages 12-20, March.
    • Handle: RePEc:lrc:larjob:v:1:y:2016:i:1:p:12-20
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    References listed on IDEAS

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    1. Peter Davis, 2006. "Spatial competition in retail markets: movie theaters," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 964-982, December.
    2. Marvel, Howard P, 1976. "The Economics of Information and Retail Gasoline Price Behavior: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1033-1060, October.
    3. William Comanor & Jon Riddle, 2003. "The Costs of Regulation: Branded Open Supply and Uniform Pricing of Gasoline," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 10(2), pages 135-155.
    4. Peter Davis, 2006. "Spatial competition in retail markets: movie theaters," RAND Journal of Economics, The RAND Corporation, vol. 37(4), pages 964-982, December.
    5. Barron, John M & Umbeck, John R, 1984. "The Effects of Different Contractual Arrangements: The Case of Retail Gasoline Markets," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 313-328, October.
    6. Deck, Cary A. & Wilson, Bart J., 2008. "Experimental gasoline markets," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 134-149, July.
    7. Barron, John M. & Umbeck, John R. & Waddell, Glen R., 2008. "Consumer and competitor reactions: Evidence from a field experiment," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 517-531, March.
    8. John Greenhut & M. L. Greenhut & Sheng-yung Li, 1980. "Spatial Pricing Patterns in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(2), pages 329-350.
    9. George Deltas, 2008. "Retail Gasoline Price Dynamics And Local Market Power," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 613-628, September.
    10. Barron, John M. & Taylor, Beck A. & Umbeck, John R., 2004. "Number of sellers, average prices, and price dispersion," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1041-1066, November.
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    Citations

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    Cited by:

    1. Jing Xu & Alan T. Murray, 2019. "Spatial variability in retail gasoline markets," Asia-Pacific Journal of Regional Science, Springer, vol. 3(2), pages 581-603, June.

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    More about this item

    Keywords

    Gas; Geography; Retail price; Spatial competition; Retail price.;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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