This dissertation examines the pricing behavior of firms in the fast food industry. I initially focus on how prices vary according to the geographic environment of each firm. I then analyze how price variation differs according to the different types of menu items and the different ownership concentrations of chains.; Chapter One of the dissertation focuses on the role of geographic differentiation on the pricing of fast food outlets. Understanding the role of geographic differentiation on prices is central to FTC decisions about mergers or understanding a firm's optimal entry location, for example. The focus in this chapter is competition between two of the chains—Burger King and McDonald's. In this chapter I adapt the standard methodology for estimating the utility parameters and marginal costs of firms to accommodate using price data but not quantity data. I then use the estimated parameters to run counterfactual experiments to illustrate the role of differentiation on price and give insight into when mergers are likely to hinder competition.; Chapter Two gives details about the data and a brief background of the fast food industry. I also analyze how the levels of price variation across outlets vary according to the type of the menu items and the ownership concentration of the chains.; Chapter Three re-examines the methodology from Chapter One. I first discuss the conditions under which the estimates in Chapter One to be consistent. Then, I demonstrate that for markets with two firms on a line the patterns of equilibrium prices will be different under different sets of parameter values. Finally, I use fake data experiments to demonstrate that the methodology from Chapter One can recover the true sets of parameters.
展开▼