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.
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Balaguer, J., Pernías, J.C. Measuring the effect of local competition on prices in a context of spatial differentiation. Lett Spat Resour Sci 4, 109–116 (2011). https://doi.org/10.1007/s12076-011-0055-y
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DOI: https://doi.org/10.1007/s12076-011-0055-y