Centrality and pricing in spatially differentiated markets: The case of gasoline

Matthias Firgo, Dieter Pennerstorfer and Christoph Weiss

International Journal of Industrial Organization, 2015, vol. 40, issue C, 81-90

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.

Keywords: Network centrality; Spatial differentiation; Gasoline prices (search for similar items in EconPapers)
JEL-codes: C21 D43 L11 L81 R12 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (30)

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Related works:
Working Paper: Centrality and Pricing in Spatially Differentiated Markets: The Case of Gasoline (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:40:y:2015:i:c:p:81-90

DOI: 10.1016/j.ijindorg.2015.03.009

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