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Dynamic pricing in the spanish gasoline market: A tacit collusion equilibrium

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  • Perdiguero García, Jordi

Abstract

During the last twenty years, the Spanish petrol market has undergone an intensive restructuration process; it has changed from being a state-owned monopoly to total liberalization and privatization. This liberalization process was accompanied by measures that facilitated the creation of a "national champion," the Repsol Group, which is a huge, vertically integrated company with a high market share in all the industry's segments. Using a dynamic model, this paper analyses whether the prices established by companies in the Spanish gasoline market, after the restructuration process, fits with a tacit collusion equilibrium. The empirical results show that a strategic behaviour of companies occurs and is compatible with a tacit collusion price strategy. So, the restructuration process does not seem to have introduced effective competition into the Spanish gasoline market.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 4 (April)
Pages: 1931-1937

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Handle: RePEc:eee:enepol:v:38:y:2010:i:4:p:1931-1937

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Web page: http://www.elsevier.com/locate/enpol

Related research

Keywords: Gasoline market Collusion Dynamic games;

References

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  1. Matteo Manera & Margherita Grasso, 2005. "Asymmetric Error Correction Models for the Oil-Gasoline Price Relationship," Working Papers 2005.75, Fondazione Eni Enrico Mattei.
  2. Contín-Pilart, Ignacio & Correljé, Aad F. & Blanca Palacios, M., 2009. "Competition, regulation, and pricing behaviour in the Spanish retail gasoline market," Energy Policy, Elsevier, vol. 37(1), pages 219-228, January.
  3. Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers 367, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Hosken, Daniel S. & McMillan, Robert S. & Taylor, Christopher T., 2008. "Retail gasoline pricing: What do we know?," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1425-1436, November.
  5. Ignacio Contin & Aad Correlje & Emilio Huerta, 1999. "The Spanish Gasoline Market: From Ceiling Regulation to Open Market Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-14.
  6. Borenstein, S. & Shepard, A., 1993. "Dynamic Pricing in Retail Gazoline Markets," Papers 93-22, California Davis - Institute of Governmental Affairs.
  7. Ivaldi, Marc & Jullien, Bruno & Rey, Patrick & Seabright, Paul & Tirole, Jean, 2003. "The Economics of Tacit Collusion," IDEI Working Papers 186, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Godby, Rob & Lintner, Anastasia M. & Stengos, Thanasis & Wandschneider, Bo, 2000. "Testing for asymmetric pricing in the Canadian retail gasoline market," Energy Economics, Elsevier, vol. 22(3), pages 349-368, June.
  9. Alejandro Bello Pintado & Sandra Cavero Brújula, 2007. "Competencia estratégica en la distribución minorista de combustibles de automoción," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 15(3), pages 125-154, Winter.
  10. Duffy-Deno, Kevin T., 1996. "Retail price asymmetries in local gasoline markets," Energy Economics, Elsevier, vol. 18(1-2), pages 81-92, April.
  11. Lance J. Bachmeier & James M. Griffin, 2003. "New Evidence on Asymmetric Gasoline Price Responses," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 772-776, August.
  12. Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-99, May.
  13. Bello, Alejandro & Cavero, Sandra, 2008. "The Spanish retail petroleum market: New patterns of competition since the liberalization of the industry," Energy Policy, Elsevier, vol. 36(2), pages 612-626, February.
  14. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
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Citations

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Cited by:
  1. Juan Luis Jiménez & Jordi Perdiguero, 2013. "“One more lie: the ‘Monday effect’ in Spain’s retail petrol market”," IREA Working Papers 201324, University of Barcelona, Research Institute of Applied Economics, revised Dec 2013.
  2. Juan Luis Jiménez & Jordi Perdiguero, 2012. "“Mergers and difference-in-difference estimator: why firms do not increase prices?”," IREA Working Papers 201205, University of Barcelona, Research Institute of Applied Economics, revised Feb 2012.
  3. Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.

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