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Price and Quality Competition in Spatial Markets. The Case of Camping Sites

  • Dieter Pennerstorfer

    (WIFO)

This paper investigates the influence of competition on price and product quality among Austrian camping sites, a market charactised by both horizontal (spatial) and vertical product differentiation. Theoretically, the effect of competition on quality is ambiguous and depends on the degree of cost substitutability between output and quality. Estimating a system of equations shows that intense competition has a positive impact on product quality and a negative effect on prices (conditional on quality). As high quality is associated with high prices, the total effect of competition on prices is quite small.

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Paper provided by WIFO in its series WIFO Working Papers with number 466.

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Length: 39 pages
Date of creation: 02 Apr 2014
Date of revision:
Handle: RePEc:wfo:wpaper:y:2014:i:466
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  7. Mobley, Lee R & Frech, Ted E & Anselin, Luc, 2008. "Spatial Interaction, Spatial Multipliers, and Hospital Competition," University of California at Santa Barbara, Economics Working Paper Series qt4m8862hd, Department of Economics, UC Santa Barbara.
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  16. Ambarish Chandra & Mariano Tappata, 2011. "Consumer search and dynamic price dispersion: an application to gasoline markets," RAND Journal of Economics, RAND Corporation, vol. 42(4), pages 681-704, December.
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  18. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
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  21. Ching-to Albert Ma & James F. Burgess Jr., 1992. "Quality Competition, Welfare, and Regulation," Papers 0024, Boston University - Industry Studies Programme.
  22. Raphael Thomadsen, 2005. "The Effect of Ownership Structure on Prices in Geographically Differentiated Industries," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 908-929, Winter.
  23. Gravelle, Hugh, 1999. "Capitation contracts: access and quality," Journal of Health Economics, Elsevier, vol. 18(3), pages 315-340, June.
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  25. Marcello Montefiori, 2005. "Spatial competition for quality in the market for hospital care," The European Journal of Health Economics, Springer, vol. 6(2), pages 131-135, June.
  26. James Joseph Fogarty, 2012. "Expert opinion and cuisine reputation in the market for restaurant meals," Applied Economics, Taylor & Francis Journals, vol. 44(31), pages 4115-4123, November.
  27. David Andersson, 2010. "Hotel attributes and hedonic prices: an analysis of internet-based transactions in Singapore’s market for hotel rooms," The Annals of Regional Science, Springer, vol. 44(2), pages 229-240, April.
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  29. Barron, John M. & Taylor, Beck A. & Umbeck, John R., 2004. "Number of sellers, average prices, and price dispersion," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1041-1066, November.
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