Market concentration and price dispersion; the role of asymmetric spatial competition

Activity: Lecture / PresentationAcademic


We show that asymmetric spatial competition drives both interfirm price dispersion and market share inequality. Since asymmetry in spatial competition can’t be measured directly, we propose to use a decomposed version of the Hirschmann Herfindahl index to empirically test the relationship between market share inequality and interfirm price dispersion.
We apply our framework to a panel data set of long haul and short haul air markets originating in Europe. We find that interfirm price dispersion is related to market share inequality rather than market concentration. Our results are also consistent with PED-type models of intrafirm price dispersion
Period6 Jan 2012
Event titleAnnual meeting of the American Economic Association
Event typeLecture