Spatial price competition: A semiparametric approach

Joris Pinkse, Margaret E. Slade, Craig Brett

Research output: Contribution to journalArticle

201 Scopus citations

Abstract

We investigate the nature of price competition among firms that produce differentiated products and compete in markets that are limited in extent. We propose an instrumental variables series estimator for the matrix of cross price response coefficients, demonstrate that our estimator is consistent, and derive its asymptotic distribution. Our semiparametric approach allows us to discriminate among models of global competition, in which all products compete with all others, and local competition, in which products compete only with their neighbors. We apply our semiparametric estimator to data from U.S. wholesale gasoline markets and find that, in this market, competition is highly localized.

Original languageEnglish (US)
Pages (from-to)1111-1153
Number of pages43
JournalEconometrica
Volume70
Issue number3
DOIs
Publication statusPublished - Jan 1 2002

    Fingerprint

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this