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

• Autores: Matthias Firgo, Dieter Pennerstorfer, Christoph R. Weiss
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 40, Nº. 1, 2015, págs. 81-90
• Idioma: inglés
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• Resumen

  • 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.