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On the Effects of Suggested Prices in Gasoline Markets

Author

Listed:
  • Riemer P. Faber

    (Erasmus School of Economics, Erasmus University Rotterdam)

  • Maarten C.W. Janssen

    (University of Vienna, and Erasmus School of Economics, Erasmus University Rotterdam)

Abstract

This article analyzes the role of suggested prices in the Dutch retail market for gasoline. Suggested prices are announced by large oil companies with the suggestion that retailers follow them. There are at least two competing rationales for the existence of suggested prices: they may either help retailers translate changes in international gasoline spot market prices into retail prices, or they may coordinate retail prices. We show that there is, next to the international spot market prices, additional information in suggested prices that explains retail prices. Therefore, we conclude that suggested prices help to coordinate retail prices.

Suggested Citation

  • Riemer P. Faber & Maarten C.W. Janssen, 2008. "On the Effects of Suggested Prices in Gasoline Markets," Tinbergen Institute Discussion Papers 08-116/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20080116
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    References listed on IDEAS

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    More about this item

    Keywords

    gasoline markets; collusion; price setting; suggested prices;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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