Pricing Dynamics and Leadership: Evidence from the Retail Gasoline Industry

2018 ◽  
Author(s):  
Jorge Lemus ◽  
Fernando Luco
Keyword(s):  
Retail Gasoline ◽  
Gasoline Industry ◽  
Pricing Dynamics

scholarly journals Learning to Coordinate: A Study in Retail Gasoline

2019 ◽  
Vol 109 (2) ◽  
pp. 591-619 ◽  
Author(s):  
David P. Byrne ◽  
Nicolas de Roos
Keyword(s):  
Price Competition ◽  
Equilibrium Selection ◽  
Price Leadership ◽  
Market Prices ◽  
Retail Gasoline ◽  
Gasoline Industry ◽  
Urban Market ◽  
Dominant Firms ◽  
Equilibrium Transition ◽  
Detection Strategies

This paper studies equilibrium selection in the retail gasoline industry. We exploit a unique dataset that contains the universe of station-level prices for an urban market for 15 years, and that encompasses a coordinated equilibrium transition mid-sample. We uncover a gradual, three-year equilibrium transition, whereby dominant firms use price leadership and price experiments to create focal points that coordinate market prices, soften price competition, and enhance retail margins. Our results inform the theory of collusion, with particular relevance to the initiation of collusion and equilibrium selection. We also highlight new insights into merger policy and collusion detection strategies. (JEL G34, L12, L13, L71, L81, Q35)

Who Benefits from Information Disclosure? The Case of Retail Gasoline

2019 ◽  
Vol 11 (2) ◽  
pp. 277-305 ◽  
Author(s):  
Fernando Luco
Keyword(s):  
Local Search ◽  
Information Disclosure ◽  
Search Behavior ◽  
Distributional Effects ◽  
Disclosure Policy ◽  
Retail Gasoline ◽  
Gasoline Industry ◽  
Sequential Implementation

How does online price disclosure affect competition when both consumers and firms can use the disclosed information? This paper addresses this question exploiting the sequential implementation of an online price-disclosure policy in the Chilean retail gasoline industry. The results show that disclosure increased margins by 9 percent on average, though the effects varied across the country depending on the intensity of local search behavior. Because margins increased the least, and even decreased, in high-search areas, where income is also higher, the results also show that price disclosure policies may have important distributional effects. (JEL D83, L11, L71, L81, O13, Q35, Q41)

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