A Study on the Mechanism of Urban Catering Price Differentiation from the Perspective of Imperfectly Competitive Markets
DOI:
https://doi.org/10.54097/cmn44882Keywords:
Monopolistic competition, Price stratification, Brand premium, Platform attention, Location costAbstract
It is hard to fully explain the price differentials in urban catering markets based on the quality differential of their products. Rather, more complicated structural mechanisms exist behind price differentials. According to the theoretical model of monopolistic competition, this paper sets up a three-dimensional price stratification analysis model including brand recognizability, platform attention and location cost. With the help of the publicly available data of an online restaurant platform in New Delhi, where there are 1,684 valid sample observations at the store level, this paper systematically studies the price stratification mechanism of three different types of firms: independent store, chain brands and viral stores. Both descriptive statistics and analysis of variance confirm the existence of price stratification among the three types of firms. The results of Spearman correlation analysis demonstrate that votes and location cost proxy are two key explanatory variables behind price differentials and their Spearman coefficients are 0.40 and 0.38, which are both far greater than that of user rating. Meanwhile, semi-log regressions further reveal that while controlling for popularity and location conditions, chain brands still have a stable price premium around 8.09%, yet the independent significance of viral-store price premium cannot be held any more. The price premium of viral stores is mainly determined by their combination effect of platform popularity and location conditions.
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