A Bayesian heterogeneous coefficients spatial autoregressive panel data model of retail fuel duopoly pricing

James LeSage, Colin Vance and Yao-Yu Chih

Regional Science and Urban Economics, 2017, vol. 62, issue C, 46-55

Abstract: We apply a heterogenous coefficient spatial autoregressive panel model to explore competition/cooperation by duopoly pairs of German fueling stations in setting prices for diesel and e5 fuel. We rely on a Markov Chain Monte Carlo (MCMC) estimation methodology applied with non-informative priors, which produces estimates equivalent to those from (quasi-) maximum likelihood. We explore station-level pricing behavior using pairs of proximately situated fueling stations with no nearby neighbors. Our sample data represents average daily diesel and e5 fuel prices, and refinery cost information covering more than 487 days.

Keywords: Spatial panel data models; Markov Chain Monte Carlo; Spatial autoregressive model; Observation-level spatial interaction (search for similar items in EconPapers)
JEL-codes: C11 C23 D43 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:62:y:2017:i:c:p:46-55

DOI: 10.1016/j.regsciurbeco.2016.11.003

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