Network Centrality and Market Prices: Empirical Evidence

Matthias Firgo; Dieter Pennerstorfer; Christoph Weiss

doi:10.1016/j.econlet.2015.11.032

Network Centrality and Market Prices: Empirical Evidence

Matthias Firgo
, Dieter Pennerstorfer
, Christoph Weiss

Institute of Economics

Research output: Contribution to journal › Article › peer-review

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.

Original language	English
Pages (from-to)	79-83
Number of pages	5
Journal	Economics Letters
Volume	139
DOIs	https://doi.org/10.1016/j.econlet.2015.11.032
Publication status	Published - 01 Feb 2016

Fields of science

502 Economics
502013 Industrial economics

JKU Focus areas

Social Systems, Markets and Welfare States
Social and Economic Sciences (in general)

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10.1016/j.econlet.2015.11.032

Cite this

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title = "Network Centrality and Market Prices: Empirical Evidence",

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{\textquoteright} pricing behavior and further find that the importance of centrality increases with market size.",

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AB - 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.

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DO - 10.1016/j.econlet.2015.11.032

M3 - Article

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JO - Economics Letters

JF - Economics Letters

ER -

Network Centrality and Market Prices: Empirical Evidence

Abstract

Fields of science

JKU Focus areas

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