Spatial Pricing in Interdependent Markets: A Case Study of Petrol Retailing in Sheffield

Abstract

This paper reports the development of empirical models to explain spatial price variation in an urban area. Models are constructed for petrol price data collected in 1995 and 1997 in Sheffield, England. The 1995 data are modelled by using only supply-side predictors following the collection of supply-side information from field surveys of the retail sites, a site questionnaire survey, and interviews with site managers. The 1997 data are modelled by using supply-side predictors and demand-side predictors that relate to the economic characteristics of the population of consumers. This modelling is based on field surveys of the sites, a new site questionnaire survey, and a household survey. The purpose of this work is to assess supply-side and demand-side factors in explaining spatial price variation. Supply-side predictors are classified into site characteristics, location characteristics, and measures of spatial competition. We examine the relative importance of these different groups of supply-side variab...