Retail Redlining: Are gasoline prices higher in poor and minority neighborhoods?
AbstractHigher retail prices are frequently cited as a cost of living in poor, minority neighborhoods. However, the empirical evidence, which primarilycomes from the grocery gap literature on food prices, has been mixed. This study uses new data on retail gasoline prices in three major U.S.cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that gasoline prices do not varygreatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10 percentage point increase in the percentof families with incomes below the poverty line relative to families with incomes between 1 and 2 times the poverty line, retail gasoline prices are estimated to increase by an average of 0.70 percent. This differential is reduced to 0.22 percent once we add controls for costs, competition, and demand. Finally, we provide evidence that the remaining, small, price differential for poor neighborhoods is likely the result of traditional price discrimination in response to less competition and/or more inelastic demand in these locations.
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Bibliographic InfoPaper provided by Middlebury College, Department of Economics in its series Middlebury College Working Paper Series with number 0906.
Length: 33 pages
Date of creation: Aug 2009
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Other versions of this item:
- Caitlin Knowles Myers & Grace Close & Laurice Fox & John William Meyer & Madeline Niemi, 2011. "Retail Redlining: Are Gasoline Prices Higher In Poor And Minority Neighborhoods?," Economic Inquiry, Western Economic Association International, vol. 49(3), pages 795-809, 07.
- NEP-ALL-2009-10-10 (All new papers)
- NEP-MIC-2009-10-10 (Microeconomics)
- NEP-MKT-2009-10-10 (Marketing)
- NEP-URE-2009-10-10 (Urban & Real Estate Economics)
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