The Impact of Maximum Markup Regulation on Prices

37 Pages Posted: 10 Nov 2014

See all articles by Christos Genakos

Christos Genakos

Cambridge Judge Business School; Athens University of Economics and Business (AUEB); Center for Economic Policy Research (CEPR); Center for Economic Performance (CEP)

Pantelis Koutroumpis

Oxford Martin Programme of Technological and Economic Change; University of Oxford - Institute for New Economic Thinking at the Oxford Martin School; Imperial College Business School

Mario Pagliero

University of Turin - Department of Economics; University of Turin - Collegio Carlo Alberto

Multiple version iconThere are 2 versions of this paper

Date Written: November 2014

Abstract

We study the repeal of a regulation that imposed maximum wholesale and retail markups for all but five fresh fruits and vegetables. We compare the prices of products affected by regulation before and after the policy change and use the unregulated products as a control group. We find that abolishing regulation led to a significant decrease in both retail and wholesale prices. However, markup regulation affected wholesalers directly and retailers only indirectly. The results are consistent with markup ceilings providing a focal point for collusion among wholesalers.

Keywords: markup regulation, markups, policy evaluation

JEL Classification: L0, L1, L4, L5

Suggested Citation

Genakos, Christos and Koutroumpis, Pantelis and Pagliero, Mario, The Impact of Maximum Markup Regulation on Prices (November 2014). CEPR Discussion Paper No. DP10243, Available at SSRN: https://ssrn.com/abstract=2521464

Christos Genakos (Contact Author)

Cambridge Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Athens University of Economics and Business (AUEB) ( email )

76 Patission Street
Athens, 104 34
Greece

HOME PAGE: http://www.aueb.gr/users/cgenakos

Center for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Center for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Pantelis Koutroumpis

Oxford Martin Programme of Technological and Economic Change ( email )

University of Oxford
34 Broad Street
Oxford, OX1 3BD
United Kingdom
01865610388 (Phone)
OX1 3BD (Fax)

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Mario Pagliero

University of Turin - Department of Economics ( email )

Corso Unione Sovietica 218b
10134 Torino
Italy

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

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