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Less pain at the pump? The effects of regulatory interventions in retail gasoline markets

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  • Dewenter, Ralf
  • Heimeshoff, Ulrich

Abstract

Increasing price levels, high price volatility and the suspicion of collusive behavior are important topics of public debates on competition in retail gasoline markets in many countries. Several governments and competition authorities introduced fuel price regulations in form of restrictions on the frequencies of fuel price changes per day. We present empirical evidence of the effects of fuel price regulation in Austria and Western Australia using difference-in-differences methods to estimate treatment effects of the implementation of such pricing rules. Our estimates provide evidence that fuel price levels in Austria decreased after implementation of regulation. However, we cannot find robust significant effects of regulation on fuel price levels in Western Australia.

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  • Dewenter, Ralf & Heimeshoff, Ulrich, 2012. "Less pain at the pump? The effects of regulatory interventions in retail gasoline markets," DICE Discussion Papers 51, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:51
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    3. Francisco Teixeira Raeder & Niagara Rodrigues & Luciano Dias Losekann, 2022. "Asymmetry in Gasoline Price Transmission: How do Fuel Pricing Strategy and the Ethanol Addition Mandate Affect Consumers?," International Journal of Energy Economics and Policy, Econjournals, vol. 12(4), pages 517-527, July.
    4. Øystein Foros & Mai Nguyen-Ones & Frode Steen, 2021. "The Effects of a Day off from Retail Price Competition: Evidence on Consumer Behavior and Firm Performance in Gasoline Retailing," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 28(1), pages 49-87, January.
    5. Thomas Wein, 2014. "Preventing Margin Squeeze: An Unsolvable Puzzle for Competition Policy? The Case of the German Gasoline Market," Working Paper Series in Economics 309, University of Lüneburg, Institute of Economics.
    6. Wittmann, Nadine, 2014. "Regulating gasoline retail markets: The case of Germany," Economics Discussion Papers 2014-17, Kiel Institute for the World Economy (IfW Kiel).
    7. Justus Haucap & Ulrich Heimeshoff & Manuel Siekmann, 2017. "Fuel Prices and Station Heterogeneity on Retail Gasoline Markets," The Energy Journal, , vol. 38(6), pages 81-104, November.
    8. Fasoula, Evanthia & Schweikert, Karsten, 2018. "Price regulations and price adjustment dynamics: Evidence from the Austrian retail fuel market," Hohenheim Discussion Papers in Business, Economics and Social Sciences 08-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    9. Justus Haucap & Willi Diez & Hans-Joachim Otto & Heinz-J. Bontrup, 2012. "Steigende Benzinpreise: Fehlende Transparenz auf dem Öl- und Kraftstoffmarkt?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(11), pages 03-15, June.
    10. Yevgeny Tsodikovich & Ehud Lehrer, 2019. "Stochastic revision opportunities in Markov decision problems," Annals of Operations Research, Springer, vol. 279(1), pages 251-270, August.
    11. Haucap, Justus & Heimeshoff, Ulrich & Siekmann, Manuel, 2015. "Price dispersion and station heterogeneity on German retail gasoline markets," DICE Discussion Papers 171, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    12. Ralf Dewenter & Ulrich Heimeshoff & Hendrik Lüth, 2017. "The impact of the market transparency unit for fuels on gasoline prices in Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 24(5), pages 302-305, March.
    13. Arezoo Ghazanfari & Armin Razmjoo, 2022. "The Effect of Market Isolation on Competitive Behavior in Retail Petrol Markets," Sustainability, MDPI, vol. 14(13), pages 1-33, July.
    14. Haucap, Justus & Heimeshoff, Ulrich & Siekmann, Manuel, 2016. "Selling gasoline as a by-product: The impact of market structure on local prices," DICE Discussion Papers 240, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Zanxin Wang & Rui Wang & Yaqing Liu, 2024. "The macroeconomic effect of petroleum product price regulation in alleviating the crude oil price volatility," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-22, April.
    16. Obradovits, Martin, 2014. "Austrian-style gasoline price regulation: How it may backfire," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 33-45.
    17. Muck, Johannes, 2016. "Tariff-mediated network effects with incompletely informed consumers," DICE Discussion Papers 210, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    18. Noel, Michael D. & Chu, Lanlan, 2015. "Forecasting gasoline prices in the presence of Edgeworth Price Cycles," Energy Economics, Elsevier, vol. 51(C), pages 204-214.
    19. Martin, Simon, 2020. "Market transparency and consumer search - Evidence from the German retail gasoline market," DICE Discussion Papers 350, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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    More about this item

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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