Network Centrality and Market Prices. An Empirical Note
WIFO Working Paper No. 503
18 Pages Posted: 3 Nov 2015 Last revised: 26 Feb 2016
Date Written: September 21, 2015
We empirically investigate the importance of centrality (holding a central position in a spatial network) for strategic interaction in pricing for the Austrian retail gasoline market. Results from spatial autoregressive models suggest that the gasoline station located most closely to the market center – defined as the 1-median location – exerts the strongest effect on pricing decisions of other stations. We conclude that centrality influences firms' pricing behavior and further find that the importance of centrality increases with market size.
Keywords: network centrality, spatial competition, retail markets, gasoline prices
JEL Classification: C21, D43, L11, L81, R12
Suggested Citation: Suggested Citation