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Collusive Upward Gasoline Price Movements in Medium-Sized German Cities

Author

Listed:
  • Arne Neukirch

    (Leuphana University Lueneburg, Germany)

  • Thomas Wein

    (Leuphana University Lueneburg, Germany)

Abstract

Do we have effective competition between the gasoline's big five oligopolists (Aral, Shell, Esso, Total and Jet) and fringe gasoline stations? Using 2014 Market Transparency price data from 66 cities with populations between 60,000 and 100,000, we analyze which brands lead price increases, the first average price mark-up in the evening, and the trend on price increases until midnight. Furthermore, we measure the response time it takes for competitors to react to these price increases, and how much prices change from the beginning to the end of a day. By watching local activities of the big brands, it is possible to measure how smaller businesses, such as Jet or independent retailers, react to Aral's and Shell's price changes. Multivariate estimations allows to control for gasoline type (regular or diesel), school holidays, weekends, weekdays, location -such as East or West Germany-, wholesale and starting prices. Descriptive results show the typical patterns. Aral (or Shell) will start a price increase round, and then Shell (or Aral) will more or less immediately follow. Total, Esso and Non-Oligopolists react within one or two hours. Jet behaves more as an "outsider" with later reaction times and lower price mark-ups. Multivariate estimation indicates that the single cause "price change by competitors" is less important and nearly irrelevant for Jet.

Suggested Citation

  • Arne Neukirch & Thomas Wein, 2016. "Collusive Upward Gasoline Price Movements in Medium-Sized German Cities," Working Paper Series in Economics 363, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:363
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    References listed on IDEAS

    as
    1. Arne Neukirch & Thomas Wein, 2015. "Marktbeherrschung im Tankstellenmarkt Fehlender Binnen- und Außenwettbewerb an der Tankstelle? Deskriptive Evidenz für Marktbeherrschung," Working Paper Series in Economics 352, University of Lüneburg, Institute of Economics.
    2. Haucap, Justus & Heimeshoff, Ulrich & Siekmann, Manuel, 2015. "Price dispersion and station heterogeneity on German retail gasoline markets," DICE Discussion Papers 171, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. repec:zbw:rwirep:0522 is not listed on IDEAS
    4. Kihm, Alex & Ritter, Nolan & Vance, Colin, 2014. "Is the German Retail Gas Market Competitive? A Spatial-temporal Analysis Using Quantile Regression," Ruhr Economic Papers 522, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Lewis, Matthew S., 2012. "Price leadership and coordination in retail gasoline markets with price cycles," International Journal of Industrial Organization, Elsevier, vol. 30(4), pages 342-351.
    6. Benjamin Atkinson, 2009. "Retail Gasoline Price Cycles: Evidence from Guelph, Ontario Using Bi-Hourly, Station-Specific Retail Price Data," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 85-110.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Christoph Kleineberg, 2020. "Market definition of the german retail gasoline industry on highways and those in the immediate vicinity," Working Paper Series in Economics 389, University of Lüneburg, Institute of Economics.
    2. Siekmann, Manuel, 2017. "Characteristics, causes, and price effects: Empirical evidence of intraday Edgeworth cycles," DICE Discussion Papers 252, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Institute of Economics, 2020. "Institut für Volkswirtschaftslehre Forschungsbericht 2019," Working Paper Series in Economics 388, University of Lüneburg, Institute of Economics.
    4. Eibelshäuser, Steffen & Wilhelm, Sascha, 2017. "Markets Take Breaks: Dynamic Price Competition with Opening Hours," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168247, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Market power; collusive behavior; gasoline market;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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