The Lundberg price and margin data also give some indication of the source of price
discrimination, if it exists. If most of a station's marginal buyers are deciding between
buying from that station or reducing total purchases of gasoline, then the seller is a monopolist for most of its buyers and faces a demand elasticity close to or equal to the buyers' elasticity of demand for the good. Alternatively, if most of a station's marginal customers are deciding between buying from one station or switching to another, then the seller is competing with other stations for its marginal customers and faces a demand elasticity that reflects the
buyers' cross elasticity of demand among sellers. The fact that gas stations charge markups
that are no greater than 5% to 10%'^ implies that they face demand elasticities of no less than 10 to 20. These are far greater than the common estimates of the price elasticity of demand for gasoline, which are virtually always less than 2.^" Thus, the demand elasticities that individual stations face seem to be determined primarily by the buyers' cross elasticities among sellers, not their overall demand elasticities for the product. This indicates that price discrimination would more likely be based on differences in cross elasticities—costs of
switching sellers—than differences in elasticities of demand for the product.