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Price Regulation and Fraud—with Special Emphasis on Gasoline Retailing

Author

Listed:
  • Julio César Arteaga

    (Universidad Autónoma de Nuevo León)

  • Daniel Flores

    (Universidad Autónoma de Nuevo León)

Abstract

In this paper, we study fraud and price regulation in gasoline retailing: We model the incentives that retail stations have to dispense less gasoline than the amount that consumers pay for: both under fixed and flexible price regimes. The results of the model indicate that competition, cheating fines, and law enforcement efforts reduce incentives to cheat regardless of the price regime. Interestingly, price-cap regulation itself creates additional incentives to cheat and reduces welfare. Nevertheless, its effect on consumers’ surplus is ambiguous.

Suggested Citation

  • Julio César Arteaga & Daniel Flores, 2022. "Price Regulation and Fraud—with Special Emphasis on Gasoline Retailing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(2), pages 175-192, March.
    • Handle: RePEc:kap:revind:v:60:y:2022:i:2:d:10.1007_s11151-021-09840-z
    DOI: 10.1007/s11151-021-09840-z
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    More about this item

    Keywords

    Gasoline; Price cap; Cheating;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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