Retail Redlining: Are gasoline prices higher in poor and minority neighborhoods?

Caitlin Myers, Grace Close, Laurice Fox, John William Meyer and Madeline Niemi

Middlebury College Working Paper Series from Middlebury College, Department of Economics

Abstract: Higher retail prices are frequently cited as a cost of living in poor, minority neighborhoods. However, the empirical evidence, which primarilycomes from the grocery gap literature on food prices, has been mixed. This study uses new data on retail gasoline prices in three major U.S.cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that gasoline prices do not varygreatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10 percentage point increase in the percentof families with incomes below the poverty line relative to families with incomes between 1 and 2 times the poverty line, retail gasoline prices are estimated to increase by an average of 0.70 percent. This differential is reduced to 0.22 percent once we add controls for costs, competition, and demand. Finally, we provide evidence that the remaining, small, price differential for poor neighborhoods is likely the result of traditional price discrimination in response to less competition and/or more inelastic demand in these locations.

Pages: 33 pages
Date: 2009-08
New Economics Papers: this item is included in nep-mic, nep-mkt and nep-ure
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http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0906.pdf (application/pdf)

Related works:
Journal Article: RETAIL REDLINING: ARE GASOLINE PRICES HIGHER IN POOR AND MINORITY NEIGHBORHOODS? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mdl:mdlpap:0906

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