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Letters in Spatial and Resource Sciences

, Volume 4, Issue 2, pp 109–116 | Cite as

Measuring the effect of local competition on prices in a context of spatial differentiation

  • Jacint Balaguer
  • José C. Pernías
Original Paper
  • 101 Downloads

Abstract

This paper examines the problem of estimation bias when the effect of local competition on prices is investigated. The hotel industry was chosen as a representative case of industries that offer a spatially differentiated product. It is shown that, in this context, including spatial variables as controls can be especially useful for reducing bias in the cross-sectional estimator. We also show how our results are robust to alternative size definitions for geographically relevant markets.

Keywords

Retail prices Spatial differentiation Local competition Cross-sectional estimator 

JEL Classification

L11 L81 D43 C21 

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Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.Department of EconomicsUniversitat Jaume ICastellóSpain

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