 Competition and demand effects of geographic distance to rivalsRosario Silva The Service Industries Journal, 2016, vol. 36, issue 1-2, 37-57 Abstract: Based on previous research in the literature of spatial economics and agglomeration, this study proposes that a firm's geographic distance to its rivals may have two opposite effects on prices which depend on the strength of local demand. In periods of high demand, the competition effect of proximity is relatively smaller than the benefits of being geographically close, which results in a positive net effect of proximity on prices. To the contrary, in periods of low demand, the negative competitive effect of proximity will be greater than the positive effect; therefore, the net effect of proximity on prices is negative. The results for a sample of 1838 hotels support the two contrary consequences. These findings contribute to increase our knowledge of the relation between geographical distance and prices in service industries in which competition is local and demand fluctuates over time. Date: 2016 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:servic:v:36:y:2016:i:1-2:p:37-57 Ordering information: This journal article can be ordered from DOI: 10.1080/02642069.2016.1138470 Access Statistics for this article The Service Industries Journal is currently edited by Eileen Bridges, Professor Domingo Ribeiro, Ronald Goldsmith, Barry Howcroft and Youjae Yi More articles in The Service Industries Journal from Taylor & Francis Journals |
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