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Price Matching And The Domino Effect In A Retail Gasoline Market

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  • BENJAMIN ATKINSON
  • ANDREW ECKERT
  • DOUGLAS S. WEST

Abstract

Using gasoline station price data collected eight times per day for 103 d for 27 stations in Guelph, Ontario, it is found that, consistent with an informal theory of competitive gasoline pricing, stations set prices to match a small number of other stations. However, these matched stations are not necessarily the closest. While retailers frequently respond to price changes within 2 h, many take considerably longer. Finally, while price decreases do ripple across the market like falling dominos, increases propagate across the city based more on geographic location and source of price control than on proximity to leaders of these increases. (JEL L13, L40, L81)

Suggested Citation

  • Benjamin Atkinson & Andrew Eckert & Douglas S. West, 2009. "Price Matching And The Domino Effect In A Retail Gasoline Market," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 568-588, July.
    • Handle: RePEc:bla:ecinqu:v:47:y:2009:i:3:p:568-588
    DOI: 10.1111/j.1465-7295.2008.00149.x
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    References listed on IDEAS

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    Cited by:

    1. Nicolas de Roos & Hajime Katayama, 2013. "Gasoline Price Cycles Under Discrete Time Pricing," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 175-193, June.
    2. Juan Jiménez & Jordi Perdiguero, 2011. "Does Accessibility Affect Retail Prices and Competition? An Empirical Application," Networks and Spatial Economics, Springer, vol. 11(4), pages 677-699, December.
    3. Packalen, Mikko & Sen, Anindya, 2013. "Static and dynamic merger effects: A market share based empirical analysis," International Review of Law and Economics, Elsevier, vol. 36(C), pages 12-24.
    4. Firgo, Matthias & Pennerstorfer, Dieter & Weiss, Christoph R., 2015. "Centrality and pricing in spatially differentiated markets: The case of gasoline," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 81-90.
    5. Sylvain Benoît & Yannick Lucotte & Sébastien Ringuedé, 2019. "Competition and price stickiness: Evidence from the French retail gasoline market," Working Papers hal-02292332, HAL.
    6. Wills-Johnson, Nick & Bloch, Harry, 2010. "A simple spatial model for Edgeworth Cycles," Economics Letters, Elsevier, vol. 108(3), pages 334-336, September.

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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