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Allies or rivals? Spatial price competition in the Chinese retail gasoline market of inner Mongolia

Author

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  • Yihua Yu
  • Jian Cui
  • Chuwen Huang
  • Hanfang Yang

Abstract

This study examines the pricing behaviour in the gasoline market using station-level pricing data from Inner Mongolia, China. The spatial econometric findings confirm that: (1) there is a significant spatial dependence among gas stations; (2) the two state-owned oil giants, PetroChina and Sinopec, receive a positive pricing effect from their brands compared with other stations; (3) there is no significant evidence of price competition among PetroChina stations, and some evidence of competition among Sinopec stations, and more intense competition among other stations; and (4) ‘stand-alone’ (no stations nearby) stations have a price premium, but the premium is limited by the price regulation. Our results show the heterogeneity in pricing behaviour between stations, implying the need for differentiated policies to ensure orderly competition in the retail gasoline market.

Suggested Citation

  • Yihua Yu & Jian Cui & Chuwen Huang & Hanfang Yang, 2023. "Allies or rivals? Spatial price competition in the Chinese retail gasoline market of inner Mongolia," Spatial Economic Analysis, Taylor & Francis Journals, vol. 18(2), pages 197-215, April.
    • Handle: RePEc:taf:specan:v:18:y:2023:i:2:p:197-215
    DOI: 10.1080/17421772.2022.2118361
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