Market Concentration and Product Variety Under Spatial Competition: Evidence from Retail Gasoline

20 Pages Posted: 22 Oct 2004

See all articles by Klaus Peter Gugler

Klaus Peter Gugler

Vienna University of Economics and Business; European Corporate Governance Institute (ECGI)

Georg Götz

University of Giessen - Department of Economics

Date Written: September 2004

Abstract

We show that for a spatially differentiated economy reduced product variety is the likely outcome of mergers except in cases where exit costs in relation to (outlet-specific) fixed costs are high. Our empirical analysis of the Austrian retail gasoline market confirms that increases in concentration reduce product variety. Ignoring this product variety effect is likely to lead to an underestimate of market power in structural merger analysis.

Keywords: spatial product differentiation, retail gasoline, mergers, concentration

JEL Classification: L11, L13, L90

Suggested Citation

Gugler, Klaus Peter and Götz, Georg, Market Concentration and Product Variety Under Spatial Competition: Evidence from Retail Gasoline (September 2004). Available at SSRN: https://ssrn.com/abstract=608964

Klaus Peter Gugler (Contact Author)

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

HOME PAGE: http://www.wu.ac.at/iqv/mitarbeiter/gugler

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Georg Götz

University of Giessen - Department of Economics ( email )

Licher Str. 62
Giessen, Hessen D-35394
Germany
+49 641 99 22050 (Phone)
+49 641 99 19867 (Fax)

HOME PAGE: http://wiwi.uni-giessen.de/home/goetz/

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