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The Impact of Maximum Markup Regulation on Prices

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  • Genakos, Christos D.
  • Koutroumpis, Pantelis
  • Pagliero, Mario

Abstract

We study the repeal of a regulation that imposed maximum wholesale and retail markups for all but five fresh fruits and vegetables. We compare the prices of products affected by regulation before and after the policy change and use the unregulated products as a control group. We find that abolishing regulation led to a significant decrease in both retail and wholesale prices. However, markup regulation affected wholesalers directly and retailers only indirectly. The results are consistent with markup ceilings providing a focal point for collusion among wholesalers.

Suggested Citation

  • Genakos, Christos D. & Koutroumpis, Pantelis & Pagliero, Mario, 2014. "The Impact of Maximum Markup Regulation on Prices," CEPR Discussion Papers 10243, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10243
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    Cited by:

    1. Mocetti, Sauro & Rizzica, Lucia & Roma, Giacomo, 2021. "Regulated occupations in Italy: Extent and labour market effects," International Review of Law and Economics, Elsevier, vol. 66(C).
    2. Sampi Bravo,James Robert Ezequiel & Jooste,Charl & Vostroknutova,Ekaterina, 2021. "Identification Properties for Estimating the Impact of Regulation on Markups and Productivity," Policy Research Working Paper Series 9523, The World Bank.
    3. Florent Venayre, 2015. "L'efficacité du pouvoir ultramarin d'injonction structurelle en question," GREDEG Working Papers 2015-50, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    4. Christos Genakos & Mario Pagliero, 2022. "Competition and Pass-Through: Evidence from Isolated Markets," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 35-57, October.
    5. Becker, Maike & Pfeifer, Gregor & Schweikert, Karsten, 2021. "Price Effects of the Austrian Fuel Price Fixing Act: A Synthetic Control Study," Energy Economics, Elsevier, vol. 97(C).
    6. Fotis, Panagiotis & Polemis, Michael, 2018. "The impact of market deregulation on milk price: A dynamic panel data approach," MPRA Paper 86542, University Library of Munich, Germany.
    7. Zhang, Xiao-Bing & Fei, Yinxin & Zheng, Ying & Zhang, Lei, 2020. "Price ceilings as focal points to reach price uniformity: Evidence from a Chinese gasoline market," Energy Economics, Elsevier, vol. 92(C).

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    More about this item

    Keywords

    markup regulation; markups; policy evaluation;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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