Spatial Differentiation and Vertical Mergers in Retail Markets for Gasoline
American Economic Review · 2012 · Volume 102 · Issue 5
Abstract
This paper studies an empirical model of spatial competition applied to gasoline markets. The main feature is to specify commuting paths as the "locations" of consumers in a Hotelling-style model. As a result, spatial differentiation depends in an intuitive way on the structure of the road network and the direction of traffic flows. The model is estimated using panel data on the Quebec City gasoline market and used to evaluate the consequences of a recent vertical merger. Difference-in-difference and counterfactual simulation methods are compared, and the results, to a large extent, validate the assumptions of the demand model. (JEL G34, L13, L42, L81, Q41, R41)
Keywords
Mergers, Acquisitions, Restructuring, Voting, Proxy Contests, Corporate Governance, Oligopoly and Other Imperfect Markets, Vertical Restraints, Resale Price Maintenance, Quantity Discounts, Retail and Wholesale Trade, e-Commerce, Energy: Demand and Supply, Transportation: Demand, Supply, and Congestion, Safety and Accidents, Transportation Noise
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