Exits in the gasoline market: evidence from Austria

Abstract

The retail gasoline market is going through a process of restructuring and consolidation in many developed economies. During the past decade, a large number of gasoline stations have been closed down. The present paper aims to investigate this process. One of the key characteristics of the retail gasoline market is that competition is localised, and this spatial dimension of competition has to be taken into account when investigating the (binary) decision of whether or not to exit from this business. The results of a probit model estimated on the Austrian retail gasoline sector suggest that the degree of spatial differentiation (distance between gasoline stations) as well as other station-specific and regional characteristics can explain parts of the actual exit behaviour observed between 2003 and 2011.