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Regulating gasoline retail markets: The case of Germany


  • Wittmann, Nadine


In 2011, price peaks in retail gasoline prices caused public outrage and attracted the attention of German regulatory agencies. After having examined the market, competition authorities concluded that tacit collusion existed but could not easily be prosecuted under given competition law. In several other countries, various types of regulatory schemes are implemented to tackle tacit collusive behavior, e.g., there are price ceilings established in Luxembourg or per day limits of price increases given in Austria. However, research has found that none of them has led to satisfactory results. Hence, the following paper proposes a different regulatory approach, i.e., the implementation of corrective taxes. Results show that a specially tailored tax on price successfully manages to render collusion an unprofitable business by collecting marginal profits and that the inherent vice of the gasoline retail market, i.e., the transparency that enables tacit-and therefore non-prosecutable-collusion, could be turned into a regulatory virtue as it becomes a powerful means to help successfully tackle imperfect competition and to bring about a more efficient market outcome.

Suggested Citation

  • Wittmann, Nadine, 2014. "Regulating gasoline retail markets: The case of Germany," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-33.
  • Handle: RePEc:zbw:ifweej:201433

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    References listed on IDEAS

    1. Haucap, Justus & Müller, Hans Christian, 2012. "The Effects of Gasoline Price Regulations: Experimental Evidence," DICE Discussion Papers 47, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Snorre Kverndokk & Knut Einar Rosendahl, 2013. "Effects of Transport Regulation on the Oil Market: Does Market Power Matter?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(3), pages 662-694, July.
    3. Havranek, Tomas & Irsova, Zuzana & Janda, Karel, 2012. "Demand for gasoline is more price-inelastic than commonly thought," Energy Economics, Elsevier, vol. 34(1), pages 201-207.
    4. Zhongmin Wang, 2009. "(Mixed) Strategy in Oligopoly Pricing: Evidence from Gasoline Price Cycles Before and Under a Timing Regulation," Journal of Political Economy, University of Chicago Press, vol. 117(6), pages 987-1030, December.
    5. Suvankulov, Farrukh & Lau, Marco Chi Keung & Ogucu, Fatma, 2012. "Price regulation and relative price convergence: Evidence from the retail gasoline market in Canada," Energy Policy, Elsevier, vol. 40(C), pages 325-334.
    6. Danielsen, Albert L., 1979. "Constraints on the world oil monopoly price: A comment," Resources and Energy, Elsevier, vol. 2(1), pages 97-100, September.
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    Cited by:

    1. Thomas Wein, 2014. "Preventing Margin Squeeze: An Unsolvable Puzzle for Competition Policy? The Case of the German Gasoline Market," Working Paper Series in Economics 309, University of Lüneburg, Institute of Economics.

    More about this item


    gasoline retail market; regulation; market structure and antitrust; collusion;

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection


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