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The pricing behavior of Italian gas stations: Some evidence from the Cuneo retail fuel market

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  • Alderighi, Marco
  • Baudino, Marco

Abstract

This paper studies how gas stations adjust their gasoline and diesel prices in response to their neighboring competitors. The empirical analysis relies on data collected from January to August 2011 on the daily prices of 20 gas stations located in Cuneo, Italy. These data show significant price uniformity, especially within the same geographical area of the town. Approximately one-third of gas stations responded within a day to targeted competitors' price changes, indicating some evidence of price matching behavior in the industry. Additionally, there is some, but discontinuous, geographical price propagation, testifying to the presence of a weak domino effect. Finally, spatial econometric analysis suggests that there is spatial dependence between gas stations up to about 1.1km.

Suggested Citation

  • Alderighi, Marco & Baudino, Marco, 2015. "The pricing behavior of Italian gas stations: Some evidence from the Cuneo retail fuel market," Energy Economics, Elsevier, vol. 50(C), pages 33-46.
    • Handle: RePEc:eee:eneeco:v:50:y:2015:i:c:p:33-46
    DOI: 10.1016/j.eneco.2015.04.017
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    2. Arezoo Ghazanfari, 2021. "Regional Patterns for the Retail Petrol Prices," International Journal of Energy Economics and Policy, Econjournals, vol. 11(4), pages 383-397.
    3. Farkas, Richárd, 2017. "Empirikus reakciógörbe-becslés a magyar kiskereskedelmi benzinpiacon [Estimating empirical reaction functions in the Hungarian retail gasoline market]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 267-284.
    4. Cárdenas, Jeisson & Gutiérrez, Luis H. & Otero, Jesús, 2017. "Investigating diesel market integration in France: Evidence from micro data," Energy Economics, Elsevier, vol. 63(C), pages 314-321.
    5. Vásquez Cordano, Arturo Leonardo & Rojas, Pedro & Aurazo, José, 2021. "Pricing Coordination in a Spatial Context: Evidence from the Retail Vehicular Natural Gas Market of Peru," Documentos de Trabajo 006, Escuela de Postgrado GERENS.
    6. Bergantino, Angela Stefania & Capozza, Claudia & Intini, Mario, 2018. "Empirical investigation of retail gasoline prices," Working Papers 18_5, SIET Società Italiana di Economia dei Trasporti e della Logistica.
    7. Alderighi, Marco & Nicolini, Marcella, 2022. "Strategic information disclosure in vertical markets," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    8. Nguyen-Ones , Mai & Steen, Frode, 2018. "Market Power in Retail Gasoline Markets," Discussion Paper Series in Economics 21/2019, Norwegian School of Economics, Department of Economics, revised 01 Jul 2019.
    9. Leonardo C. B. Cardoso & Carlos Frederico A. Uchôa & Williams Huamani & David R. Just & Raúl V. Gomez, 2022. "Price effects of spatial competition in retail fuel markets: the impact of a new rival nearby," Papers in Regional Science, Wiley Blackwell, vol. 101(1), pages 81-105, February.
    10. Bergantino, Angela S. & Capozza, Claudia & Intini, Mario, 2020. "Empirical investigation of retail fuel pricing: The impact of spatial interaction, competition and territorial factors," Energy Economics, Elsevier, vol. 90(C).
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    12. Hajime Seya & Kay W. Axhausen & Makoto Chikaraishi, 2020. "Spatial unconditional quantile regression: application to Japanese parking price data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(2), pages 351-402, October.

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    More about this item

    Keywords

    Price transmission; Gasoline and diesel prices; Imperfectly competitive markets; Spatial econometrics;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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