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Third decimal place odd prices trigger competition: evidence from the Italian retail gasoline market

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  • Marco Alderighi
  • Marcella Nicolini

Abstract

Recent literature shows that in the US gasoline prices are higher in locations using more odd prices (particularly those ending in five and nine digits), since they coarse the pricing grid and act as a focal collusive point. We replicate this analysis for the Italian market, obtaining the opposite result. Since the rightmost digit of the retail gasoline prices in Italy is the third and not the second decimal place, coarsening the pricing grid is not sufficient to support a collusive behaviour.

Suggested Citation

  • Marco Alderighi & Marcella Nicolini, 2019. "Third decimal place odd prices trigger competition: evidence from the Italian retail gasoline market," Applied Economics Letters, Taylor & Francis Journals, vol. 26(2), pages 143-146, January.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:2:p:143-146
    DOI: 10.1080/13504851.2018.1441502
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