SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: This paper studies competition in small, concentrated and inter- related markets. Our data set consists of price information fron 543 driving schools in 250 local markets in sweden, which gives a large sample to test hypotheses on how market structure influences competition. The results show that if prices in nearby markets are low, and the distances to them are short, it reduces prices, as suggested in models of spatial competition. Moreover, we find that prices in closely located markets are interdependent. It is also shown that prices are increasing in firm concentration within a market, as most theories of oligopoly predict.

Keywords: Spatial competition; interrelated markets; oligopoly; driving schools

JEL-codes: C24; C31; D43; L13; L84; R32

27 pages, November 1995

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Published as

Marcus Asplund and Rickard Sandin, (1999), 'Competition in Interrelated Markets: An Empirical Study', International Journal of Industrial Organization, vol 17, pages 353-369

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