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Price dispersion and station heterogeneity on German retail gasoline markets

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  • Haucap, Justus
  • Heimeshoff, Ulrich
  • Siekmann, Manuel

Abstract

Price levels and movements on gasoline and diesel markets are heavily debated among consumers, policy-makers, and competition authorities alike. In this paper, we empirically investigate how and why price levels differ across gasoline stations in Germany, using eight months of data from a novel panel data set including price quotes from virtually all German stations. Our analysis specifically explores the role of station heterogeneity in explaining price differences across gasoline stations. Key determinants of price levels across fuel types are found to be ex-refinery prices as key input costs, a station's location on roads or highway service areas, and brand recognition. A lower number of station-specific services implies lower fuel price levels, so does a more heterogeneous local competitive environment.

Suggested Citation

  • Haucap, Justus & Heimeshoff, Ulrich & Siekmann, Manuel, 2015. "Price dispersion and station heterogeneity on German retail gasoline markets," DICE Discussion Papers 171, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:171
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Foros, Øystein & Nguyen, Mai Thi & Steen, Frode, 2017. "The Effects of a Day Off from Retail Price Competition: Evidence on Consumer Behavior and Firm Performance in Gasoline Retailing," Discussion Papers 2017/9, Norwegian School of Economics, Department of Business and Management Science.
    2. Tscharaktschiew, Stefan, 2016. "The private (unnoticed) welfare cost of highway speeding behavior from time saving misperceptions," Economics of Transportation, Elsevier, vol. 7, pages 24-37.
    3. LeSage, James P. & Vance, Colin & Chih, Yao-Yu, 2017. "A Bayesian heterogeneous coefficients spatial autoregressive panel data model of retail fuel duopoly pricing," Regional Science and Urban Economics, Elsevier, vol. 62(C), pages 46-55.
    4. Bonnet, Céline & Schain, Jan Philip, 2017. "An empirical analysis of mergers: Efficiency gains and impact on consumer prices," DICE Discussion Papers 244, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. Lesage, James P. & Vance, Colin & Chih, Yao-Yu, 2016. "A Bayesian heterogeneous coefficients spatial autoregressive panel data model of retail fuel price rivalry," Ruhr Economic Papers 617, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Frondel, Manuel & Vance, Colin & Kihm, Alex, 2015. "Time lags in the pass-through of crude-oil prices: Big data evidence from the German gasoline market," Ruhr Economic Papers 573, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Dewenter Ralf & Schwalbe Ulrich, 2016. "Preisgarantien im Kraftstoffmarkt," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(3), pages 276-288, September.
    8. Arne Neukirch & Thomas Wein, 2016. "Collusive Upward Gasoline Price Movements in Medium-Sized German Cities," Working Paper Series in Economics 363, University of Lüneburg, Institute of Economics.

    More about this item

    Keywords

    Gasoline Pricing; Price Dispersion; Fuel Prices; Gasoline Stations;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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