Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market

Relevant market definition remains a key element in the economic analysis of competition in the gasoline market. However, this is particularly difficult to undertake when competition is local and market power is geographically constrained, as they are in the case of the gasoline market. We analyse h...

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Detalhes bibliográficos
Autores: Perdiguero, Jordi, Borrell, Joan-Ramon
Tipo de documento: artigo
Estado:Versión aceptada para publicación
Data de publicação:2019
País:España
Recursos:Universidad de Barcelona
Repositório:Dipòsit Digital de la UB
OAI Identifier:oai:diposit.ub.edu:2445/135557
Acesso em linha:https://hdl.handle.net/2445/135557
Access Level:Acceso aberto
Palavra-chave:Indústria petroliera
Gasolina
Competència econòmica
Mercats
Mètodes de simulació
Petroleum industry and trade
Gasoline
Competition
Markets
Simulation methods
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spelling Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline marketPerdiguero, JordiBorrell, Joan-RamonIndústria petrolieraGasolinaCompetència econòmicaMercatsMètodes de simulacióPetroleum industry and tradeGasolineCompetitionMarketsSimulation methodsRelevant market definition remains a key element in the economic analysis of competition in the gasoline market. However, this is particularly difficult to undertake when competition is local and market power is geographically constrained, as they are in the case of the gasoline market. We analyse how the hypothetical monopolist or Small but Significant Non-Transitory Increase in Prices test performs when defining isochrones based solely on price information and the distance between competitors. We conclude that geographic information systems can be successfully employed in the precise definition of relevant geographic markets in the gasoline retail sector. Their application to the Spanish gasoline market indicates that the relevant geographic market is delineated by a 5- to 6-min travel-time isochrone around each station. Localized market power needs to be taken into account when analysing the adverse effects of mergers and entry regulations on gasoline retailing. To drive competition in these local circumstances, markets need to be delineated on the basis of sufficiently small isochrones since only close rivals seem to compete effectively with each other.Springer Verlag2019info:eu-repo/semantics/articleinfo:eu-repo/semantics/acceptedVersionapplication/pdfhttps://hdl.handle.net/2445/135557Articles publicats en revistes (Econometria, Estadística i Economia Aplicada)reponame:Dipòsit Digital de la UBinstname:Universidad de BarcelonaInglésVersió postprint del document publicat a: https://doi.org/10.1007/s00181-018-1427-6Empirical Economics, 2019, vol. 57, num. 1, p. 345-364https://doi.org/10.1007/s00181-018-1427-6(c) Springer Verlag, 2019info:eu-repo/semantics/openAccessoai:diposit.ub.edu:2445/1355572026-05-27T06:46:51Z
dc.title.none.fl_str_mv Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
title Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
spellingShingle Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
Perdiguero, Jordi
Indústria petroliera
Gasolina
Competència econòmica
Mercats
Mètodes de simulació
Petroleum industry and trade
Gasoline
Competition
Markets
Simulation methods
title_short Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
title_full Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
title_fullStr Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
title_full_unstemmed Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
title_sort Driving competition in local markets with near-perfect substitutes: an application on the Spanish retail gasoline market
dc.creator.none.fl_str_mv Perdiguero, Jordi
Borrell, Joan-Ramon
author Perdiguero, Jordi
author_facet Perdiguero, Jordi
Borrell, Joan-Ramon
author_role author
author2 Borrell, Joan-Ramon
author2_role author
dc.subject.none.fl_str_mv Indústria petroliera
Gasolina
Competència econòmica
Mercats
Mètodes de simulació
Petroleum industry and trade
Gasoline
Competition
Markets
Simulation methods
topic Indústria petroliera
Gasolina
Competència econòmica
Mercats
Mètodes de simulació
Petroleum industry and trade
Gasoline
Competition
Markets
Simulation methods
description Relevant market definition remains a key element in the economic analysis of competition in the gasoline market. However, this is particularly difficult to undertake when competition is local and market power is geographically constrained, as they are in the case of the gasoline market. We analyse how the hypothetical monopolist or Small but Significant Non-Transitory Increase in Prices test performs when defining isochrones based solely on price information and the distance between competitors. We conclude that geographic information systems can be successfully employed in the precise definition of relevant geographic markets in the gasoline retail sector. Their application to the Spanish gasoline market indicates that the relevant geographic market is delineated by a 5- to 6-min travel-time isochrone around each station. Localized market power needs to be taken into account when analysing the adverse effects of mergers and entry regulations on gasoline retailing. To drive competition in these local circumstances, markets need to be delineated on the basis of sufficiently small isochrones since only close rivals seem to compete effectively with each other.
publishDate 2019
dc.date.none.fl_str_mv 2019
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/acceptedVersion
format article
status_str acceptedVersion
dc.identifier.none.fl_str_mv https://hdl.handle.net/2445/135557
url https://hdl.handle.net/2445/135557
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv Versió postprint del document publicat a: https://doi.org/10.1007/s00181-018-1427-6
Empirical Economics, 2019, vol. 57, num. 1, p. 345-364
https://doi.org/10.1007/s00181-018-1427-6
dc.rights.none.fl_str_mv (c) Springer Verlag, 2019
info:eu-repo/semantics/openAccess
rights_invalid_str_mv (c) Springer Verlag, 2019
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Springer Verlag
publisher.none.fl_str_mv Springer Verlag
dc.source.none.fl_str_mv Articles publicats en revistes (Econometria, Estadística i Economia Aplicada)
reponame:Dipòsit Digital de la UB
instname:Universidad de Barcelona
instname_str Universidad de Barcelona
reponame_str Dipòsit Digital de la UB
collection Dipòsit Digital de la UB
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15.228081

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