IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/19830.html

Pricing Algorithms -- A Survey of the Literature and an Examination of their Use on the Swedish Gasoline Market

Author

Listed:
  • Friberg, Richard

Abstract

This paper provides an overview of the theoretical and empirical literatures on the effect of algorithm use on prices, focusing on the type of algorithms relevant for gasoline markets. Against this background we examine pricing and algorithm use on the Swedish gasoline market 2021-2023, relying on detailed information of what algorithms that are used by what station at what time. Only a handful of stations are using AI. Pricing at these AI stations change markedly when AI is adopted, resulting in many more price changes. On average margins are somewhat lower with AI but AI stations charge relatively higher prices during the afternoon peak in demand. In contrast use of rule-based pricing algorithms is pervasive and three out of the four major chains use rule-based algorithms from external algorithm providers. Examining of duopoly markets (stations with only one competitor within a 10-minute drive) suggest that algorithms are faster to respond to price decreases than manual pricing.

Suggested Citation

  • Friberg, Richard, 2025. "Pricing Algorithms -- A Survey of the Literature and an Examination of their Use on the Swedish Gasoline Market," CEPR Discussion Papers 19830, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19830
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP19830
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:19830. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.