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Why Fuel Surcharges may be Anticompetitive

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  • Vladimir Karamychev
  • Peran van Reeven

Abstract

With the increase in the price of oil, fuel surcharges have become a common and widely used practice in the transportation industry. Firms ask consumers to pay these surcharges in addition to the base price. Assuming that (i) fuel prices randomly fluctuate, (ii) fuel prices affect firms' costs differently, and (iii) firms pass on changes in their fuel costs to consumers, we show that the practice of fuel surcharging increases firms' profits, and constitutes an anticompetitive behaviour. © 2009 LSE and the University of Bath

Suggested Citation

  • Vladimir Karamychev & Peran van Reeven, 2009. "Why Fuel Surcharges may be Anticompetitive," Journal of Transport Economics and Policy, University of Bath, vol. 43(2), pages 141-155, May.
  • Handle: RePEc:tpe:jtecpo:v:43:y:2009:i:2:p:141-155
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    1. Baumgärtner, Stefan & Quaas, Martin, 2005. "The private and public insurance value of conservative biodiversity management," UFZ Discussion Papers 27/2005, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
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    Cited by:

    1. Valadkhani, Abbas & Babacan, Alperhan, 2014. "Modelling how much extra motorists pay on the road? A cross-sectional study of profit margins of unleaded petrol in Australia," Energy Policy, Elsevier, vol. 69(C), pages 179-188.

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