v10i2 Fiedler

Given the changing landscape of fuel retailing, this study explores the impact of spatial competition and market concentration on diesel prices in Germany. The question of how population density and gas station density, i.e. the equilibrium pattern of locations of firms, are related is examined. In addition, the impact of gas station density, as a spatial measure of competition, and market concentration on diesel prices is investigated. Based on theory, population density should have a positive impact on gas station density. Gas station density should have a negative and market concentration a positive influence on the diesel price in a district. Using 2022 data on German gas stations and diesel prices, a positive effect of population density and on gas station density, a negative effect of gas station density on diesel price, and a positive effect of market concentration on diesel price were each found at the district level. The effects of gas station density and market concentration, however, were relatively small. The results show that fuel prices at gas stations are influenced by spatial competition and market concentration.