Price Dispersion and Accessibility: A Case Study of Fast Food

This study examines spatial variation in the price and accessibility of fast food across a major urban area. We use novel data on the price of a representative fast-food meal and the location of fast-food restaurants belonging to one of three major chains in the District of Columbia and its surrounding suburbs. These data are used to test a structural model of spatial competition. The results of this study are easily interpreted and compared with a past analysis. We find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market, which in turn affects prices.