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Simulating Spatial Dynamics and Processes in a Retail Gasoline Market: An Agent‐Based Modeling Approach

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Transactions in GIS

Published online on

Abstract

Simulating the dynamics and processes within a spatially influenced retail market, such as the retail gasoline market, is a highly challenging research area. Current approaches are limited through their inability to model the impact of supplier or consumer behavior over both time and space. Agent‐based models (ABMs) provide an alternative approach that overcomes these problems. We demonstrate how knowledge of retail pricing is extended by using a ‘hybrid’ model approach: an agent model for retailers and a spatial interaction model for consumers. This allows the issue of spatial competition between individual retailers to be examined in a way only accessible to agent‐based models, allowing each model retailer autonomous control over optimizing their price. The hybrid model is shown to be successful at recreating spatial pricing dynamics at a national scale, simulating the effects of a rise in crude oil prices as well as accurately predicting which retailers were most susceptible to closure over a 10‐year period.