Centrality and Pricing in Spatially Differentiated Markets: The Case of Gasoline

Christoph Weiss, Dieter Pennerstorfer, Matthias Firgo

Publikation: Wissenschaftliche FachzeitschriftOriginalbeitrag in FachzeitschriftBegutachtung

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Abstract

We highlight the importance of 'centrality' for pricing. Firms characterized by a more central position in a spatial network are more powerful in terms of having a stronger impact on their competitors' prices and on equilibrium prices. These propositions are derived from a simple theoretical model and investigated empirically for the retail gasoline market of Vienna, Austria. We compute a measure of network centrality based on the locations of gasoline stations in the road network. Results from a spatial autoregressive model show that prices of gasoline stations are more strongly correlated with prices of central competitors.
OriginalspracheEnglisch
Seiten (von - bis)81 - 90
FachzeitschriftInternational Journal of Industrial Organization
Jahrgang40
DOIs
PublikationsstatusVeröffentlicht - 2015

Österreichische Systematik der Wissenschaftszweige (ÖFOS)

  • 502013 Industrieökonomik

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