A theoretical - empirical study of spatial pricing

Abstract

The objective of this dissertation is to set forth an original theoretical framework which can explain and predict the effect of varying levels of demand and completion on spatial prices. But the properties of our model can be viewed and confirmed as important only by statistical examination, not by a priori assertion. To do this an operational model will be set forth which will be shown to fit spatial price data more accurately than does a previously existing model. But, in addition, the model must be practical from the standpoint of time and costs. It follows that not only must we investigate the claim of greater accuracy of our model, but we also must show the economic feasibility of our model. Only the can its superiority be firmly established. It is vital to observe that the objective of this study is not to present an empirical investigation of industrial price schedules in the United States. Such schedules would require a team of researchers involving costs probably running well into the hundreds of thousands of dollars. The specific goals of the dissertation, instead, are (1) to reformulate spatial price theory, (2) to construct an operational model through which data obtained from firms can be evaluated and understood, and (3) to indicate through some existing data and other data obtained by this writer that the model is truly operational. It is in the last context that selected applications of statistical tools used in analyzing data will be used and other shown to be utilizable. ...