Monday, November 30, 2015

Network Centrality and Market Prices: An Empirical Note

Matthias Firgo (Austrian Institute of Economic Research (WIFO)) ; Dieter Pennerstorfer (Department of Economics, Vienna University of Economics and Business; Austrian Institute of Economic Research (WIFO)) ; Christoph R. Weiss (Department of Economics, Vienna University of Economics and Business) offer Network Centrality and Market Prices: An Empirical Note.

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.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/11/network-centrality-and-market-prices-an-empirical-note.html

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