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The Timing of Spatial Competition: Price Interdependence Across Booking Horizons

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  • Veronica Leoni
  • David Boto-Garcia
  • Roberto Patuelli

Abstract

This paper examines the interplay between spatial and temporal dimensions of price competition in the hotel industry, where services are non-storable and consumers must book in advance. We study how spatial price competition among hotels evolves across different booking horizons. Using a panel dataset of hotels in Venice covering daily asking prices, we estimate spatial price reaction functions for multiple booking lead times using Spatial Durbin Models. We find heterogeneous spatial price mimicking across booking horizons, with spatial dependence peaking at mid-range lead times and weakening at short lead times. Furthermore, hotels with greater room variety are able to charge higher prices, while greater variety among nearby rivals exerts downward pressure on prices. These findings reveal that the strength of spatial competition is not constant but jointly shaped by timing of booking and seasonal demand, offering new insights into intertemporal pricing and strategic interactions in perishable service markets.

Suggested Citation

  • Veronica Leoni & David Boto-Garcia & Roberto Patuelli, 2026. "The Timing of Spatial Competition: Price Interdependence Across Booking Horizons," Working Papers wp1225, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp1225
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    More about this item

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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