Gasoline Price Dispersion and Consumer Search: Evidence from a Natural Experiment

2018 ◽  
Vol 66 (3) ◽  
pp. 701-738 ◽  
Author(s):  
Michael D. Noel
Keyword(s):  
Natural Experiment ◽  
Price Dispersion ◽  
Consumer Search ◽  
Gasoline Price

scholarly journals Understanding gasoline price dispersion

2016 ◽  
Vol 57 (1) ◽  
pp. 223-252 ◽  
Author(s):  
Demet Yilmazkuday ◽  
Hakan Yilmazkuday
Keyword(s):  
Price Dispersion ◽  
Gasoline Price

scholarly journals Fairtrade Wine Price Dispersion in the United Kingdom

2017 ◽  
Vol 12 (4) ◽  
pp. 446-456 ◽  
Author(s):  
Britta Niklas ◽  
Karl Storchmann ◽  
Nick Vink
Keyword(s):  
United Kingdom ◽  
Least Squares ◽  
Price Dispersion ◽  
Ordinary Least Squares ◽  
Consumer Search ◽  
Lower Price ◽  
Weak Instruments ◽  
The United Kingdom ◽  
Substantial Bias ◽  
Squared Residuals

AbstractThis paper analyzes wine price dispersion in the United Kingdom. In particular, we are interested in examining whether Fairtrade wines are different from non-Fairtrade wines. Because Fairtrade wines serve an additional social purpose, one may think that consumers search less aggressively for the outlet with the lowest price, thus allowing for a larger price dispersion than for regular wines. We draw on data for about seven thousand wines from South Africa, Fairtrade and non-Fairtrade, sold in the United Kingdom between 2007 and 2012. In a first step, we run a hedonic regression model explaining the wine prices using Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) Instrumental Variable (IV) approaches. In the next step, we regress the squared residuals from the first step on a Fairtrade 0-1 dummy-variable. When using the squared residuals from the OLS model, we find that Fairtrade is a negative determinant of price dispersion. Therefore, Fairtrade wines exhibit a significant lower price dispersion than the comparison group. When using the squared residuals from the IV model, we find mixed results and suspect the presence of a substantial bias due to weak instruments. Finally, in order to avoid IV pitfalls, we ran Fairtrade and Non-Fairtrade wines in separate equations. We find support for the OLS results, i.e., Fairtrade wines appear to exhibit lower price dispersion than their non-Fairtrade counterparts. Whether this is due to consumer search is a priori unclear. (JEL Classifications: L31, L81, Q11)

The role of information in retail gasoline price dispersion

2019 ◽  
Vol 80 ◽  
pp. 173-187
Author(s):  
Michael D. Noel ◽  
Hongjie Qiang
Keyword(s):  
Price Dispersion ◽  
Gasoline Price ◽  
Retail Gasoline ◽  
Role Of Information

The Double Diamond Paradox

2017 ◽  
Vol 9 (3) ◽  
pp. 63-99 ◽  
Author(s):  
Daniel Garcia ◽  
Jun Honda ◽  
Maarten Janssen
Keyword(s):  
Social Welfare ◽  
Alternative Explanation ◽  
Price Dispersion ◽  
Bimodal Distribution ◽  
Consumer Search ◽  
Search Cost ◽  
Monopoly Price ◽  
Pass Through ◽  
Double Diamond ◽  
Regular Price

We study vertical relations in markets with consumer and retailer search. We obtain three important new results. First, we provide a novel explanation for price dispersion that does not depend on some form of heterogeneity among consumers. Price dispersion takes on the form of a bimodal distribution. Second, under competitive conditions (many retailers or small consumer search cost), social welfare is significantly smaller than in the double marginalization outcome. Manufacturers' regular price is significantly above the monopoly price, squeezing retailers' markups and providing an alternative explanation for incomplete cost pass-through. Third, firms' prices are decreasing in consumer search cost. (JEL D11, D21, D43, D83, L13, L60, L81)

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