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Identifying Algorithmic Pricing Technology Adoption in Retail Gasoline Markets

Author

Listed:
  • Stephanie Assad
  • Robert Clark
  • Daniel Ershov
  • Lei Xu

Abstract

While recent theoretical literature shows that algorithmic pricing (AP) may increase retail prices by facilitating collusive behavior, there has been no empirical evidence relating the adoption of AP technology to higher prices and/or collusion. One key reason is that information about firms' pricing technologies and their adoption of new pricing software is rarely available. In this paper, we use detailed price data from the German retail gasoline market, where AP was supposedly introduced in 2017. We show how to identify changes in pricing technology using structural breaks in pricing behaviors associated with AP.

Suggested Citation

  • Stephanie Assad & Robert Clark & Daniel Ershov & Lei Xu, 2022. "Identifying Algorithmic Pricing Technology Adoption in Retail Gasoline Markets," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 457-460, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:457-60
    DOI: 10.1257/pandp.20221060
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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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