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An Empirical Investigation of the Determinants of Asymmetric Pricing

  • Marc Remer

    (Economic Analysis Group, Antitrust Division, U.S. Department of Justice)

Registered author(s):

    This article empirically investigates the cause of asymmetric pricing: retail prices responding faster to cost increases than decreases. Using daily price data for over 11,000 retail gasoline stations, I nd that prices fall more slowly than they rise as a consequence of rms extracting informational rents from consumers with positive search costs. Premium gasoline prices are shown to fall more slowly than regular fuel prices but rise at the same pace, and this pricing pattern supports theories based upon competition with consumer search. Further testing also rejects focal price collusion as an important determinant of asymmetric pricing.

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    File URL: http://www.justice.gov/atr/public/eag/288447a.html
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    Paper provided by Department of Justice, Antitrust Division in its series EAG Discussions Papers with number 201210.

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    Length: 29 pages
    Date of creation: Nov 2012
    Date of revision:
    Handle: RePEc:doj:eagpap:201210
    Contact details of provider: Postal: Department of Justice Antitrust Division 450 Fifth Street NW Washington, DC 20530
    Web page: http://www.justice.gov/atr/Email:


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