Firms price discriminate based on suppliers’ relative distances to competitors

David Granlund () and Sef Meens-Eriksson ()
Additional contact information
David Granlund: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, https://www.umu.se/handelshogskolan
Sef Meens-Eriksson: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, https://www.umu.se/handelshogskolan

No 1006, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: We derive a theoretical model predicting that firms should mark down input prices more the longer distance a supplier has to a competitor’s plant relative to their own plant. We test this prediction using contract-level data on prices of waste burned at energy plants. To the best of our knowledge, we are the first to study whether firms price discriminate based on relative distance to the closest competitor. The empirical results confirm that longer relative distances to competitors’ plants lead to lower prices and show no evidence of additional effects of the distance to the chosen plant.

Keywords: auction; market power; oligopsony; price discrimination; procurement; spatial competition; transport cost; waste incineration (search for similar items in EconPapers)
JEL-codes: D43 D44 L11 L13 Q53 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2022-08-17, Revised 2024-02-05
New Economics Papers: this item is included in nep-com, nep-ene, nep-eur, nep-ind and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.usbe.umu.se/ues/ues1006.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:umnees:1006

Access Statistics for this paper

More papers in Umeå Economic Studies from Umeå University, Department of Economics Department of Economics, Umeå University, S-901 87 Umeå, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by David Skog ().