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  3. American Economic Review
  4. August 2012
  5. Spatial Differentiation and Vertical Mergers in Retail Markets for Gasoline

Spatial Differentiation and Vertical Mergers in Retail Markets for Gasoline

  • Jean-François Houde
American Economic Review
vol. 102, no. 5, August 2012
(pp. 2147-82)
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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)

Citation

Houde, Jean-François. 2012. "Spatial Differentiation and Vertical Mergers in Retail Markets for Gasoline." American Economic Review, 102 (5): 2147-82. DOI: 10.1257/aer.102.5.2147

Additional Materials

JEL Classification

  • G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
  • L13 Oligopoly and Other Imperfect Markets
  • L42 Vertical Restraints; Resale Price Maintenance; Quantity Discounts
  • L81 Retail and Wholesale Trade; e-Commerce
  • Q41 Energy: Demand and Supply
  • R41 Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise