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Markets Take Breaks: Dynamic Price Competition with Opening Hours

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  • Eibelshäuser, Steffen
  • Wilhelm, Sascha

Abstract

We study price cycles in the German retail gasoline market. We extend existing models of Bertrand competition by product differentiation, firm size and business hours. With sufficiently low product differentiation, there exists a unique subgame perfect equilibrium featuring Edgeworth price cycles. We test the model's predictions using an extensive data set. Last, we evaluate policy interventions and show that restrictions on price setting or increased market transparency harm consumer welfare.

Suggested Citation

  • Eibelshäuser, Steffen & Wilhelm, Sascha, 2017. "Markets Take Breaks: Dynamic Price Competition with Opening Hours," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168247, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc17:168247
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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