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Locational choice and price competition: some empirical results for the austrian retail gasoline market

  • Gerhard Clemenz

    ()

  • Klaus Gugler

    ()

Using data from the Austrian retail gasoline market we test the following two hypotheses derived from spatial economics: (i) Retail shops are more densely located in areas with a higher population density. (ii) Spatial competition equilibrium prices are decreasing in the density of seller locations. Both hypotheses are well supported by the data. Population density explains more than 95% of the cross-district variation in the density of gasoline stations. With respect to the relationship between prices and gas station density the coefficient has the predicted sign and is significant at the 5% level or better in all specifications. Estimation as simultaneous equations does not alter our conclusions, and suggests causality running from station density to price.

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File URL: http://hdl.handle.net/10.1007/s00181-005-0016-7
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Article provided by Springer in its journal Empirical Economics.

Volume (Year): 31 (2006)
Issue (Month): 2 (June)
Pages: 291-312

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Handle: RePEc:spr:empeco:v:31:y:2006:i:2:p:291-312
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