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Price Dispersion and Accessibility: A Case study of Fast Food

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  • Stewart, Hayden
  • Davis, David E.

Abstract

This study examines spatial variation in the price and accessibility of fast food across a major urban area. We use novel data on the price of a representative fast food meal and the location of fast food restaurants belonging to one of three major chains in the District of Columbia and its surrounding suburbs. These data are used to test a structural model of spatial competition. The results of this study are easily interpreted and compared with a past analysis. We find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market, which in turn affects prices.

Suggested Citation

  • Stewart, Hayden & Davis, David E., 2005. "Price Dispersion and Accessibility: A Case study of Fast Food," MPRA Paper 7970, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:7970
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    References listed on IDEAS

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    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
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    10. Stewart, Hayden & Blisard, Noel & Bhuyan, Sanjib & Nayga, Rodolfo M., Jr., 2004. "The Demand For Food Away From Home: Full-Service Or Fast Food?," Agricultural Economics Reports 33953, United States Department of Agriculture, Economic Research Service.
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    13. Capozza, Dennis R & Van Order, Robert, 1980. "Unique Equilibria, Pure Profits, and Efficiency in Location Models," American Economic Review, American Economic Association, vol. 70(5), pages 1046-1053, December.
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    15. Capozza, Dennis R & Van Order, Robert, 1978. "A Generalized Model of Spatial Competition," American Economic Review, American Economic Association, vol. 68(5), pages 896-908, December.
    16. Graddy, Kathryn, 1997. "Do Fast-Food Chains Price Discriminate on the Race and Income Characteristics of an Area?," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(4), pages 391-401, October.
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    Citations

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    Cited by:

    1. Stewart, Hayden & Blisard, Noel, 2006. "Household versus Community Effects: Who Really Pays More for Food?," 2006 Annual meeting, July 23-26, Long Beach, CA 21053, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Philip G. Gayle & Zijun Luo, 2015. "Choosing between Order-of-Entry Assumptions in Empirical Entry Models: Evidence from Competition between Burger King and McDonald's Restaurant Outlets," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 129-151, March.
    3. Brekke, Kurt R. & Garcia Pires, Armando J. & Schindler, Dirk & Schjelderup, Guttorm, 2017. "Capital taxation and imperfect competition: ACE vs. CBIT," Journal of Public Economics, Elsevier, vol. 147(C), pages 1-15.
    4. Gillespie, Jeffrey & Hatzenbuehler, Patrick & O'Neil, Carol & Lin, Bo & Niu, Huizhen, 2015. "The Impact of Neighborhood Income on the Cost of Energy-Dense and Nutrient-Dense Foods in Supermarkets," Journal of Food Distribution Research, Food Distribution Research Society, vol. 46(3), November.
    5. Leschewski, Andrea Marie & Weatherspoon, Dave D., 2014. "Fast Food Restaurant Pricing Strategies in Michigan Food Deserts," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 17(A).
    6. Juan Jiménez & Jordi Perdiguero, 2011. "Does Accessibility Affect Retail Prices and Competition? An Empirical Application," Networks and Spatial Economics, Springer, vol. 11(4), pages 677-699, December.
    7. Hayden Stewart & Noel Blisard, 2008. "Who Pays More for Food?," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 150-168, February.
    8. Stewart, Hayden & Dong, Diansheng, 2011. "Variation in retail costs for fresh vegetables and salty snacks across communities in the United States," Food Policy, Elsevier, vol. 36(2), pages 128-135, April.
    9. Diem Nguyen & Vicki McCracken & Ken Casavant & Eric Jessup, 2011. "Geographic location, ownership and profitability of Washington log trucking companies," Regional Science Policy & Practice, Wiley Blackwell, vol. 3(2), pages 115-125, June.

    More about this item

    Keywords

    food prices; food accessibility; spatial competition; price dispersion; fast food;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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