RETAIL REDLINING: ARE GASOLINE PRICES HIGHER IN POOR AND MINORITY NEIGHBORHOODS?

RETAIL REDLINING: ARE GASOLINE PRICES HIGHER IN POOR AND MINORITY NEIGHBORHOODS?

This study uses new data on retail gasoline prices in three cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that prices do not vary greatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 1...

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Bibliographic Details
Published in:Economic inquiry Vol. 49; no. 3; pp. 795 - 809
Main Authors: MYERS, CAITLIN KNOWLES, CLOSE, GRACE, FOX, LAURICE, MEYER, JOHN WILLIAM, NIEMI, MADELINE
Format: Journal Article
Language:English
Published: Oxford, UK Blackwell Publishing Ltd 01-07-2011
Western Economic Association International
Blackwell Publishers Ltd
Western Economic Association
Series:Economic Inquiry
Subjects:
Competition
Consumer price indexes
Family
Gasoline
Gasoline prices
Inelastic demand
Low income
Low income groups
Middle class
Mortgage discrimination
Neighborhoods
Neighbourhoods
Petrol
Price discrimination
Price level
Prices and rates
Race
Retail industry
Retail prices
Studies
U.S.A
Urban areas
Urban population
Michigan
Pennsylvania
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Summary:This study uses new data on retail gasoline prices in three cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that prices do not vary greatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10% point increase in poor families relative to middle‐upper income families, retail gasoline prices increase by an average of 0.70%. Two‐thirds of this differential is explained by cost, competition, and demand characteristics of poor neighborhoods. The remaining differential likely reflects price discrimination in response to lower competition and/or more inelastic demand in poor neighborhoods. (JEL D43, J15, L71)
Bibliography:istex:4D96D25957955F8376C216581EA5E0F78CDA5CAB
ArticleID:ECIN317
ark:/67375/WNG-ZFF9W6Q4-K
We wish to thank Peter Matthews for helpful feedback, Jack Cuneo for his assistance in using ArcGIS to geocode gas stations and provide several geographic variables, and Carrie MacFarlane and Brenda Ellis for their assistance with ArcGIS and Geolytics software. We also wish to thank the remaining students from an undergraduate seminar who assisted with the station surveys: Harrison Brown, Michael Campbell, Matthew Engel, Ryan Fink, Annabelle Fowler, Daniel Haluska, Christopher Hench, Winslow Hicks, Blake Johnson, JiaHao Li, Quincy Liao, Shenique Moxey, Cameron Poole, Mona Quarless, Leah Shackleton, and Mary Walsh.
ObjectType-Article-2
SourceType-Scholarly Journals-1
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ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.2010.00317.x