Abstract
Three models of spatial competition are tested on retail price data for the agricultural chemical industry. Three empirical tests find no evidence of any spatial competition using data from sixty-five retailers and twelve different chemicals. Demand and supply-side variables have statistically significant, but economically trivial impacts on retail chemical prices. These results point to a virtually complete control of retail prices by the chemical manufacturers, likely through the rebate program they offer retailers. The oligopoly structure of the chemical manufacturing industry makes such control possible. The results suggest that consolidation of retailers or distributors will not have anti-competitive effects since price competition is essentially absent from this market already.
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