General Economic Influences Demand: Price, Income,

Price/availability of substitutes and complements, Market size (pop), Quality attributes, …

Supply: Price, Price of Inputs (materials, …), Technology, Competitive/Strategic Influences…

Supply: OPEC

Supply: Oil exploration+Tech

Demand: China-India

Gas Buddy Map

coefficient p-valueIntercept -0.5 0.01Oil Price ($) 3.7 0.01State Tax (cents) 0.7 0.01Pop (mil) -0.9 0.45

Pop2 0.3 0.03pop density 6e-3 0.01

(popdensity)2 4e-7 0.01

Distance Production (mi) 2e-2 0.01Distance Pipeline (mi) 8e-5 0.17Refinery 5 0.03BG 5 0.15KY 4 0.05

Crude oil $10 increase 3.7 cent gas

State Tax $10 cent increase 7 cent gas

Production 100 miles increase 2 cent gas

Kentucky 4 cent increase BG not sig different from zero

Omitted Variables: Distribution network complexities; strategic pricing; …

Nakamura Studies: Only 16% price changes fundamentals driven (higher with raw materials key)

Consumer Preferences & Transactions Costs Golden Gate Bridge; Disney; SW Bell (price as

product attribute) NYSE; Supermarkets (smoothing v. inventory)

Fixed Costs Pharmaceutical Drugs v. Supermarkets Cable Bundling (+ price discrimination)

Uncertainty Long Run: MLB, Apple Short Run: Selling Bagels

NYSE SpecialistSupermarkets