Gasoline Prices Jump Up on Mondays: An Outcome of Aggressive Competition?
This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analysed similar price cyclees in other countriees find support for the Edgeworth cycle theory (Maskin and Tirole, 1988), we demonstrate that Norwegian gasoline price cycles involve a form of coordinated behavior. We also show that gasline prices follow a fixed weekly pattern, with prices increasing significantly every Monday at noon, and that gasoline companies appear to use the recommended retail price as a coordination device with a fixed link between the retail and recommended prices. Moreover, the weekly pattern changed in April 2004; whereas Thursday had been the high-price day, Monday now became the high-price day. The price-cost margin also increased significantly after the weekly pattern changed in April 2004.
|Date of creation:||Mar 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Norwich, NR4 7TJ|
Phone: +44(0)1603 593715
Fax: +44(0)1603 591622
Web page: http://www.ccp.uea.ac.uk
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oystein Foros & Frode Steen, 2008.
"Gasoline Prices Jump Up on Mondays: An Outcome of Aggressive Competition?,"
08-20, Centre for Competition Policy, University of East Anglia.
- Foros, Øystein & Steen, Frode, 2009. "Gasoline prices jump up on Mondays: An outcome of aggressive competition?," Discussion Papers 2009/2, Department of Business and Management Science, Norwegian School of Economics.
- Foros, Øystein & Steen, Frode, 2008. "Gasoline prices jump up on Mondays: An outcome of aggressive competition?," CEPR Discussion Papers 6783, C.E.P.R. Discussion Papers.
- Bettendorf, Leon & van der Geest, Stephanie A. & Varkevisser, Marco, 2003. "Price asymmetry in the Dutch retail gasoline market," Energy Economics, Elsevier, vol. 25(6), pages 669-689, November.
- Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521816632, November.
- John Conlisk & Eitan Gerstner & Joel Sobel, 1984. "Cyclic Pricing by a Durable Goods Monopolist," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 489-505.
- Frank Mathewson & Ralph Winter, 1998. "The Law and Economics of Resale Price Maintenance," Review of Industrial Organization, Springer, vol. 13(1), pages 57-84, April.
- Joel Sobel, 1984. "The Timing of Sales," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 353-368.
- Eckert, Andrew, 2003. "Retail price cycles and the presence of small firms," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 151-170, February.
- Bonanno, Giacomo & Vickers, John, 1988. "Vertical Separation," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 257-65, March.
- Lance J. Bachmeier & James M. Griffin, .
"New Evidence on Asymmetric Gasoline Price Responses,"
0208, East Carolina University, Department of Economics.
- Lance J. Bachmeier & James M. Griffin, 2003. "New Evidence on Asymmetric Gasoline Price Responses," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 772-776, August.
- Barla, Philippe, 1997.
"Firm Size Inequality and Market Power,"
Cahiers de recherche
9714, Université Laval - Département d'économique.
- Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997.
"Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 112(1), pages 305-339.
- Severin Borenstein & A. Colin Cameron, 1992. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," NBER Working Papers 4138, National Bureau of Economic Research, Inc.
- Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
- Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, November.
- repec:dgr:rugccs:200503 is not listed on IDEAS
- Asplund, Marcus & Eriksson, Rickard & Friberg, Richard, 1997.
"Price adjustments by a gasoline retail chain,"
SSE/EFI Working Paper Series in Economics and Finance
194, Stockholm School of Economics.
- Hosken, Daniel S. & McMillan, Robert S. & Taylor, Christopher T., 2008. "Retail gasoline pricing: What do we know?," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1425-1436, November.
- L. Bettendorf & S. A. van der Geest & G. H. Kuper, 2009.
"Do daily retail gasoline prices adjust asymmetrically?,"
Journal of Applied Statistics,
Taylor & Francis Journals, vol. 36(4), pages 385-397.
- Bettendorf, Leon & Geest, Stephanie van der & Kuper, Gerard, 2005. "Do daily retail gasoline prices adjust asymmetrically?," CCSO Working Papers 200503, University of Groningen, CCSO Centre for Economic Research.
- Leon Bettendorf & Stephanie van der Geest & Gerard Kuper, 2005. "Do Daily Retail Gasoline Prices adjust Asymmetrically?," Tinbergen Institute Discussion Papers 05-040/2, Tinbergen Institute.
- Compte, Olivier & Jenny, Frederic & Rey, Patrick, 2002. "Capacity constraints, mergers and collusion," European Economic Review, Elsevier, vol. 46(1), pages 1-29, January.
- Slade, Margaret E, 1998. "Strategic Motives for Vertical Separation: Evidence from Retail Gasoline Markets," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(1), pages 84-113, April.
- Prajit Dutta & Alexander Matros & Jörgen W. Weibull, 2007. "Long-run price competition," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 291-313, 06.
- Andrea Shepard, 1993. "Contractual Form, Retail Price, and Asset Characteristics in Gasoline Retailing," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 58-77, Spring.
- Andrew Eckert, 2002. "Retail price cycles and response asymmetry," Canadian Journal of Economics, Canadian Economics Association, vol. 35(1), pages 52-77, February.
- Michael D. Noel, 2008. "Edgeworth Price Cycles and Focal Prices: Computational Dynamic Markov Equilibria," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 345-377, 06.
- Greg Shaffer, 1991. "Slotting Allowances and Resale Price Maintenance: A Comparison of Facilitating Practices," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 120-135, Spring.
- Margaret E. Slade, 1992. "Vancouver's Gasoline-Price Wars: An Empirical Exercise in Uncovering Supergame Strategies," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 257-276.
- Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
- Steven Salop, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 393-406.
- Slade, Margaret E, 1987. "Interfirm Rivalry in a Repeated Game: An Empirical Test of Tacit Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 499-516, June.
- Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-99, May.
- Eckert, Andrew & West, Douglas S, 2004. "Retail Gasoline Price Cycles across Spatially Dispersed Gasoline Stations," Journal of Law and Economics, University of Chicago Press, vol. 47(1), pages 245-73, April.
When requesting a correction, please mention this item's handle: RePEc:ccp:wpaper:wp08-20. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cheryl Whittkaer)
If references are entirely missing, you can add them using this form.