Why do gas prices vary, or towards understanding the micro-structure of competition

Strategic management work on competition considers industry segments or industries for the most part. We argue that real competition occurs at much lower levels of aggregation in many industries: what we term the micro-structure of competition. Micro-structures arise from boundedly rational firms searching imperfectly for business opportunities and boundedly rational consumers searching in a behaviorally determined manner for products and services. This paper lays out the basics of the micro-structural approach to competitive analysis and presents initial propositions from that approach. Copyright © 2002 John Wiley & Sons, Ltd.