Defining Geographic Markets with Willingness-to-Travel Circles

Issues of spatial competition play a key role in many antitrust matters in terms of both defining relevant markets and evaluating competitive effects. One area where this is particularly important is competition among retail outlets such as gas stations and supermarkets. Although detailed data for conducting empirical analyses are available in many retail industries, it is often the case that practitioners must define markets, at least preliminarily, under limited information. In this article, we develop techniques for aiding in defining markets involving spatial competition under limited information. The methodology assumes that consumers make choices within a discrete area rather than assuming those choices are determined by strict calculations of distance to a given retail location.