Spatial pricing strategies in Italy’s urban gasoline markets: evidence from medium-sized cities using a spatial econometric framework

Additional evidence is essential to determine the extent and manner in which spatial variables influence the variation in gasoline prices across cities. In particular, we focus on two major Italian cities: Milan and Naples, which are the second and third largest cities after Rome. By employing a spatial econometric modelling approach, we analyse the impact of competition and territorial variables characterising the urban area within a specified radius around each observed station (i.e., the catchment area). Our findings suggest that competition reduces price-fixing behaviour in these cities, with effects that vary according to city size and territorial factors. Furthermore, the results highlight the need for a greater density of low-cost stations in urban areas.