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

Weiss, Christoph and Pennerstorfer, Dieter and Firgo, Matthias (2015) Centrality and Pricing in Spatially Differentiated Markets: The Case of Gasoline. International Journal of Industrial Organization, 40. pp. 81-90. ISSN 0167-7187


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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.

Item Type: Article
Additional Information: The work was generously supported by funds of the Oesterreichische Nationalbank (Anniversary Fund, porject number: 12974. To see the final version of this paper please visit the publisher's website. Access to the published version requires a subscription. The original publication is available at www.elsevier.com.
Keywords: Network Centrality, Spatial Differentiation, Gasoline Prices
Classification Codes: JEL C21, D43, L11, L81, R12
Divisions: Departments > Volkswirtschaft > Volkswirtschaftspolitik u Industrieökon.
Version of the Document: Accepted for Publication
Depositing User: Gertraud Novotny
Date Deposited: 08 Jun 2017 08:16
Last Modified: 08 Jun 2017 09:13
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/71387/
URI: https://epub.wu.ac.at/id/eprint/5584


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