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What is the "right" geographic market definition?

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  • Christos Genakos
  • Themistoklis Kampouris

Abstract

This paper examines the "right" geographic definition of relevant markets by analyzing how excise tax pass-through varies with local competition in the retail gasoline market of a large metropolitan city. Using a natural experiment from three unanticipated and exogenous fuel tax hikes and detailed station-level price data, we show that average pass-through is invariant to the number of nearby competitors across various geographic definitions. This contrasts with theoretical predictions and prior island-based evidence, suggesting that the entire metropolitan area functions as a single market. Our findings challenge standard isodistance- or isochrone-based market delineations used in academic research and competition policy.

Suggested Citation

  • Christos Genakos & Themistoklis Kampouris, 2026. "What is the "right" geographic market definition?," CEP Discussion Papers dp2149, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp2149
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    References listed on IDEAS

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