Network Centrality and Market Prices. An Empirical Note

WIFO Working Paper No. 503

18 Pages Posted: 3 Nov 2015 Last revised: 26 Feb 2016

See all articles by Matthias Firgo

Matthias Firgo

Austrian Institute of Economic Research (WIFO)

Dieter Pennerstorfer

Austrian Institute of Economic Research (WIFO)

Christoph Weiss

Vienna University of Economics and Business - Department of Economics

Date Written: September 21, 2015

Abstract

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

Firgo, Matthias and Pennerstorfer, Dieter and Weiss, Christoph, Network Centrality and Market Prices. An Empirical Note (September 21, 2015). WIFO Working Paper No. 503, Available at SSRN: https://ssrn.com/abstract=2685598 or http://dx.doi.org/10.2139/ssrn.2685598

Matthias Firgo

Austrian Institute of Economic Research (WIFO) ( email )

Arsenal Objekt 20
Wien, 1030
Austria
+43-1-7982601-471 (Phone)

Dieter Pennerstorfer (Contact Author)

Austrian Institute of Economic Research (WIFO) ( email )

Christoph Weiss

Vienna University of Economics and Business - Department of Economics ( email )

Augasse 2-6
A-1090 Wien
Austria

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