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Spatial clustering and market power: Evidence from the retail gasoline market

  • Pennerstorfer, Dieter
  • Weiss, Christoph

We investigate the impact of local market power and ‘spatial clustering’ on prices in the retail gasoline market. The acquisition of Aral stations from BP in the Austrian gasoline market in 2003 provides a ‘quasi-experiment’ for identification of the causal effects of changes in spatial clustering on retail prices for a panel of gasoline stations. Our econometric analysis suggests that spatial clustering of gasoline stations reduces the degree of competition between firms and increases equilibrium prices. Merger simulations show that ignoring merger-induced changes in spatial characteristics will lead to a significant bias in the evaluation of merger effects.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 4 ()
Pages: 661-675

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Handle: RePEc:eee:regeco:v:43:y:2013:i:4:p:661-675
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

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  1. Liran Einav & Jonathan Levin, 2010. "Empirical Industrial Organization: A Progress Report," Discussion Papers 09-010, Stanford Institute for Economic Policy Research.
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