The empirical literature on mergers, market power and collusion in differentiated markets has mainly focused on methods relying
on output and/or panel data. In contrast to this literature we suggest a novel approach that allows for the detection of collusive
behaviour among a group of firms making use of information on the spatial structure of horizontally differentiated products.
By estimating best response functions using a spatial econometrics approach, we focus on differences in the strategic interaction
in pricing between different groups of firms as well as on differences in price levels. We apply our method to the market
for ski lift tickets using a unique data set on ticket prices and detailed resort-specific characteristics covering all ski
resorts in Austria. We show that prices of ski resorts forming alliances are higher and increase with the size and towards
the spatial center of an alliance. Strategic interaction in pricing is higher within than outside alliances. All results are
in line with the findings of theoretical models on collusion in horizontally differentiated markets.
Forschungsbereich:Strukturwandel und Regionalentwicklung