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On the Effects of Suggested Prices in Gasoline Markets

Tinbergen Institute Discussion Paper No. 08-116/1

32 Pages Posted: 2 Dec 2008  

Riemer P. Faber

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Maarten Janssen

University of Vienna

Date Written: December 1, 2008

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.

Keywords: gasoline markets, collusion, price setting, suggested prices

JEL Classification: L11, L42, L65

Suggested Citation

Faber, Riemer P. and Janssen, Maarten, On the Effects of Suggested Prices in Gasoline Markets (December 1, 2008). Tinbergen Institute Discussion Paper No. 08-116/1. Available at SSRN: https://ssrn.com/abstract=1309608 or http://dx.doi.org/10.2139/ssrn.1309608

Riemer P. Faber (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Maarten C. W. Janssen

University of Vienna ( email )

Vienna, A-1210
Austria

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