Spatial Differentiation and Vertical Contracts in Retail Markets for Gasoline

48 Pages Posted: 10 Jun 2009  

Jean-Francois Houde

University of Pennsylvania - Business & Public Policy Department; National Bureau of Economic Research (NBER)

Date Written: June 3, 2009

Abstract

This paper studies an empirical model of spatial competition and evaluates the impact of vertical relations on prices and consumer welfare. The main feature of my approach is to specify commuting paths as the "locations" of consumers in a Hotelling-style model. As a result spatial differentation 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 Québec City gasoline market, and used to quantify markups and simulate two important counter-factual policies: elimination of vertical integration, and wholesale price discrimination ban.

Keywords: Spatial differentiation, Gasoline, Retail markets, Vertical Contract, Market power

Suggested Citation

Houde, Jean-Francois, Spatial Differentiation and Vertical Contracts in Retail Markets for Gasoline (June 3, 2009). Available at SSRN: https://ssrn.com/abstract=1417506 or http://dx.doi.org/10.2139/ssrn.1417506

Jean-Francois Houde (Contact Author)

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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