Does accessibility affect retail prices and competition?: an empirical application

Abstract

This paper attempts to link the concepts of accessibility and the firm's conduct in the regional retail market in Spain. We use a database that includes sale price, service station location, level of traffic and type of road. We show that accessibility has two main effects on final prices. The accessibility of own-brand gas stations increased their prices while the accessibility of rival gas stations causes price reductions. If we include the value of time, then no rational consumer should travel further than his nearest petrol station in search of lower prices. Finally, our paper shows that service stations can establish a dominant position if consumers do not have access to other retailers within a 17-min radius.