Douglas S. West

Retail Gasoline Price Cycles across Spatially Dispersed Gasoline Stations

Studies of volatility in retail gasoline prices have used either weekly averages of the prices at a small subset of stations in a city or daily observations on prices at a small number of stations. This paper uses daily observations on station‐specific prices within a large Canadian metropolitan area to address whether weekly average prices or prices for a small number of stations provide an accurate description of pricing in a market with volatility. This paper considers whether researchers using restricted data can draw meaningful conclusions about the appropriate theoretical model and the policy response to allegations of anticompetitive behavior.

Testing for Market Preemption Using Sequential Location Data: Reply

This study uses time series data on supermarket location to test locational implications of a theory of market preemption. The primary implication tested is that an established firm has an incentive to construct new plants in a market such that they are only bounded by other plants that it owns. It is found that the data are consistent with a state dependent stochastic process in which neighbor relations matter and also that the underlying probabilities of the process are consistent with the existence of preemptive firm behavior.

An Empirical Analysis of Retail Chains and Shopping Center Similarity

This paper uses data on the store brands contained in planned shopping centers in Edmonton and Calgary, Alberta, to carry out nonparametric tests of five hypotheses regarding shopping center similarity. The results yield evidence of (1) shopping center similarity (in store brands) across geographic markets for certain store types, (2) store brand proliferation within shopping centers by multichain firms that operate stores catering to comparison shoppers, (3) greater similarity between malls in store types that are dominated by multichain firms, and (4) greater similarity (in store brands) of malls owned by the same firm than of malls owned by different firms. Copyright 1992 by Blackwell Publishing Ltd.

Spatial price and variety competition in an urban retail market: A nested logit analysis

Abstract We develop a nested logit model of spatial competition in retail markets. Consumers choose stores on the basis of price, variety and transport cost. Three games are considered: a price game, a variety game and a combined price and variety game. The videocassette rental market in Edmonton, Alberta, is used for illustration. Centrally located stores set lower prices and higher varieties than stores on the market periphery. Prices in the price and price-variety games are nearly identical, despite large differences in varieties. Similarly, equilibrium varieties in the price-variety game are similar to varieties in the variety game.

Double Marginalization and Privatization in Liquor Retailing

The purpose of this paper is to examine the price andstore count predictions of the spatial and non-spatialmodels of vertical integration between an upstreammonopolist and a downstream monopolisticallycompetitive retail industry using data from Albertasrecently privatized liquor retailing industry. Thisindustry, which had been a government owned monopoly,became monopolistically competitive underprivatization. The models predict that verticaldisintegration will lead to higher retail prices andan increase in the store count in markets that cansupport multiple stores. Both predictions aresupported by liquor store count and price data.

Manhattan versus Euclid: Market areas computed and compared

Abstract In this paper, we conduct a comparative analysis of neighbor relations and market areas of stores calculated using Manhattan and Euclidean metrics. Three types of comparisons are made: a theoretical comparison of the two metrics, an empirical comparison of a number of statistics relating to market areas and their adjacencies, and a comparison of some test results for spatial predation. We find that market areas calculated using the Euclidean metric provide good approximations to those calculated using the Manhattan metric. The algorithms which we designed to perform the computations in this paper are briefly commented upon.

Predation among supermarkets: An algorithmic locational analysis

Abstract First an algorithm that finds certain polygonal tesselations of R 2 is described; the polygons involved here are market areas of supermarkets in a city, defined by prices and transport cost proportional to Euclidean distance. Then statistics based on the adjacencies, boundaries, and sizes of all market areas (in Edmonton, Canada, during 1959–1973) are used to test hypotheses on locational predation.

Exit and Upgrading in Response to Entry: The Case of Gasoline Retailing

Abstract Spatial competition models have established the importance of localized competition in determining competitive outcomes. However, few empirical studies attempt to determine to what extent actual local market conditions affect strategic decisions. This paper uses data provided by the acquisition of the Vancouver area Super‐Save chain of retail gasoline stations by ARCO to study the role of geographic space in competition, and the spatial response of the major competitors in the market to entry. The possibility of both accommodating and aggressive capacity responses by the major incumbent firms to entry are considered. While the empirical results show that proximity to ARCO increased the probability that a station shuts down, proximity to ARCO can explain only a limited amount of shutdown after ARCO’s entry. There is no evidence that incumbent firms used station locations and capacity changes to respond aggressively to ARCO’s entry with a spatial predation strategy.

Empirical tests for predatory reputation

In our earlier studies of the supermarket industry in Edmonton, Alberta, we tested for predation in a spatial setting and found evidence which supported the predation hypothesis. In this paper we use data on the locations, entry, exit and market area populations of supermarkets in Edmonton to test whether the entry deterrence and timing-of-expansion implications of the reputation hypothesis are confirmed. We find that our time series data are consistent with entrys being deterred and with delayed opening of new supermarkets by the dominant established firm.

An econometric-spatial analysis of the growth and decline of shopping centers

Abstract Using a model which is based in large part on the Eaton and Lipsey theory of central places and its implications, we examine empirically why the internal composition of shopping centers might change over time and how such changes might be due to competition from neighboring centers in the city. Through regression analysis of data on the locations and internal compositions of shopping centers in Edmonton, Alberta over a 19-year period, we find that changes in a shopping centers store count depend on certain shopping center characteristics, particularly changes in excess capacity, which in turn depend on changes in a centers market area brought about by new competition.