Open AccessBuy here, or keep driving? The effect of geographic market density on retail gas prices
Author(s) -
Daniel K. N. Johnson,
Amy Schultheis,
Kristina M. Lybecker,
Devin Nadar
Publication year - 2016
Publication title -
journal of business
Language(s) - English
Resource type - Journals
eISSN - 2380-405X
pISSN - 2380-4041
DOI - 10.18533/job.v1i2.20
Subject(s) - counterintuitive , competition (biology) , retail market , business , point (geometry) , regression analysis , econometrics , economics , marketing , statistics , ecology , philosophy , geometry , mathematics , epistemology , biology
Using market data from six midsized U.S. metro areas with similar isolation from neighboring retail markets, this paper examines the effects of location on retail price, while controlling for brand effects. Spatial regression analysis accommodates the potential of spatially correlated errors, and sensitivity analysis tests for several measures of retail location concentration. Results point to reproducible brand premiums and some location-based price differences, but also show the counterintuitive finding that areas with more market competition do not show significantly lower retail gas prices.