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Price Dispersion and Accessibility: A Case study of Fast Food

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  • Stewart, Hayden
  • Davis, David E.

Abstract

This study examines spatial variation in the price and accessibility of fast food across a major urban area. We use novel data on the price of a representative fast food meal and the location of fast food restaurants belonging to one of three major chains in the District of Columbia and its surrounding suburbs. These data are used to test a structural model of spatial competition. The results of this study are easily interpreted and compared with a past analysis. We find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market, which in turn affects prices.

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File URL: http://mpra.ub.uni-muenchen.de/7626/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7617.

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Date of creation: Apr 2005
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Handle: RePEc:pra:mprapa:7617

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Keywords: food prices; food accessibility; spatial competition; price dispersion; fast food;

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References

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  1. W. B. MacLeod & G. Norman & J.F. Thisse, 1987. "Price Discrimination and Equilibrium in Monopolistic Competition," Working Papers 701, Queen's University, Department of Economics.
  2. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  3. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
  4. Capozza, Dennis R & Van Order, Robert, 1978. "A Generalized Model of Spatial Competition," American Economic Review, American Economic Association, vol. 68(5), pages 896-908, December.
  5. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
  6. Rath, Kali P. & Zhao, Gongyun, 2001. "Two stage equilibrium and product choice with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 19(9), pages 1441-1455, November.
  7. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  8. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Frankel, D.M., 1996. "The (Retail) Price of Inequality," Papers 23-96, Tel Aviv.
  10. MacDonald, James M. & Nelson, Paul Jr., 1991. "Do the poor still pay more? Food price variations in large metropolitan areas," Journal of Urban Economics, Elsevier, vol. 30(3), pages 344-359, November.
  11. Lahiri, Kajal & Schmidt, Peter, 1978. "On the Estimation of Triangular Structural Systems," Econometrica, Econometric Society, vol. 46(5), pages 1217-21, September.
  12. Capozza, Dennis R & Van Order, Robert, 1980. "Unique Equilibria, Pure Profits, and Efficiency in Location Models," American Economic Review, American Economic Association, vol. 70(5), pages 1046-53, December.
  13. Graddy, Kathryn, 1997. "Do Fast-Food Chains Price Discriminate on the Race and Income Characteristics of an Area?," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(4), pages 391-401, October.
  14. Stewart, Hayden & Blisard, Noel & Bhuyan, Sanjib & Nayga, Rodolfo M., Jr., 2004. "The Demand For Food Away From Home: Full-Service Or Fast Food?," Agricultural Economics Reports 33953, United States Department of Agriculture, Economic Research Service.
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Citations

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Cited by:
  1. Stewart, Hayden & Dong, Diansheng, 2011. "Variation in retail costs for fresh vegetables and salty snacks across communities in the United States," Food Policy, Elsevier, vol. 36(2), pages 128-135, April.
  2. Gayle, Philip & Luo, Zijun, 2012. "Choosing between Order-of-Entry Assumptions in Empirical Entry Models: Evidence from Competition between Burger King and McDonald’s Restaurant Outlets," MPRA Paper 51259, University Library of Munich, Germany, revised Sep 2013.
  3. Juan Jiménez & Jordi Perdiguero, 2011. "Does Accessibility Affect Retail Prices and Competition? An Empirical Application," Networks and Spatial Economics, Springer, vol. 11(4), pages 677-699, December.
  4. Stewart, Hayden & Blisard, Noel, 2006. "Household versus Community Effects: Who Really Pays More for Food?," 2006 Annual meeting, July 23-26, Long Beach, CA 21053, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Leschewski, Andrea Marie & Weatherspoon, Dave D., 2014. "Fast Food Restaurant Pricing Strategies in Michigan Food Deserts," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 17(A).

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