Gasoline Price Dispersion and Consumer Search: Evidence from a Natural Experiment

38 Pages Posted: 22 Mar 2019

Date Written: September 2018

Abstract

The vast majority of empirical studies examining the link between consumer search and price dispersion focus on how changes in consumer search impact price dispersion. This article does the reverse—it examines how a shock to price dispersion impacts consumer search. A direct measure of search is used and an exogenous shock to price dispersion is found in a refinery fire that caused decades‐old retail gasoline price cycles, and the nonlinear high‐frequency price dispersion pattern generated by them, to stop. Identifying effects from this shock, the results show a substantial response of consumer search to changes in price dispersion.

Suggested Citation

Noel, Michael D., Gasoline Price Dispersion and Consumer Search: Evidence from a Natural Experiment (September 2018). The Journal of Industrial Economics, Vol. 66, Issue 3, pp. 701-738, 2018, Available at SSRN: https://ssrn.com/abstract=3358537 or http://dx.doi.org/10.1111/joie.12179

Michael D. Noel (Contact Author)

Texas Tech University ( email )

237 Holden Hall
Box 41014
Lubbock, TX 79407
United States

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