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Spatial density, average prices and price dispersion. Evidence from the Spanish hotel industry

  • Jacint Balaguer Coll

    ()

    (Universitat Jaume I)

  • José C. Pernías

    ()

    (Dpto. de Economía)

Based on the assumption that location is especially relevant in the lodging industry, we exploit a dataset of Spanish hotels to examine the relationship between spatial competition and retail price level and dispersion. Our results support the hypothesis that a greater density of competitors implies both a lower level and less dispersion of retail prices. We find that close competitors, in terms of hotel category and distance, have a stronger effect on price setting behavior. Moreover, we report weak evidence that the relationship between spatial competition and price level depends on whether the day considered belongs to the midweek or the weekend. Therefore, variation in the type of consumers seems to play quite an important role in explaining the relationship. Partiendo del supuesto de que la localización es especialmente relevante para el sector del alojamiento, utilizamos una base de datos de hoteles españoles para examinar la relación entre competencia espacial y el nivel y la dispersión de los precios de las habitaciones. Nuestros resultados confirman la hipótesis de que una mayor densidad de competidores implica niveles de precios menores y menor dispersión de precios. Los competidores cercanos, ya lo sean en términos de categoría hotelera como de distancia, tienen una mayor influencia sobre la fijación de precios. Adicionalmente, encontramos evidencia débil acerca de que la relación entre competencia espacial y el nivel de precios depende de si el día considerado es laborable o corresponde al fin de semana. Por tanto, las variaciones en el tipo de consumidores parecen tener un papel importante en la explicación de esta relación.

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File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-2010-03.pdf
File Function: Fisrt version / Primera version, 2010
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2010-03.

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Length: 28 pages
Date of creation: Apr 2010
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2010-03
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