Publication Date

Winter 2003


This paper applies spatial econometrics to hamburger price data to assess the degree of substitutability of products and locations of spatially dispersed franchised chains. First, while intrachain price variation exists, I find that hamburger prices at neighboring outlets of different chains are spatially uncorrelated. I conclude that their products are not close substitutes, which provides an explanation for why price promotions have not raised market share. I do find spatial price correlation, however, among proximate outlets of separate franchisees within the same chain. This finding implies that customers view proximate locations of a chain as substitutes.


Required Publisher Statement
© Wiley. Final version published as: Kalnins, A. (2003). Hamburger prices and spatial econometrics. Journal of Economics & Management Strategy, 12(4), 591-616. doi: 10.1111/j.1430-9134.2003.00591.x
Reprinted with permission. All rights reserved.