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Centrality and Pricing in Spatially Differentiated Markets: The Case of Gasoline

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.

Identiferoai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:5584
Date05 1900
CreatorsWeiss, Christoph, Pennerstorfer, Dieter, Firgo, Matthias
PublisherElsevier
Source SetsWirtschaftsuniversität Wien
LanguageEnglish
Detected LanguageEnglish
TypeArticle, PeerReviewed
Formatapplication/pdf
Relationhttp://dx.doi.org/10.1016/j.ijindorg.2015.03.009, http://www.elsevier.com, http://epub.wu.ac.at/5584/

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