Might as well jump! Coordinating on more frequent price hikes in a retail gasoline market

University of Bergen, WORKING PAPERS IN ECONOMICS No. 04/19

39 Pages Posted: 5 Nov 2019 Last revised: 10 Nov 2020

See all articles by Andreas Tveito

Andreas Tveito

University of Bergen - Department of Economics

Date Written: October 25, 2019

Abstract

This paper studies price leadership and coordination in the retail gasoline market.
Its main contribution is to show how large retail chains use price leadership to
both agree on and sustain a new margin-enhancing equilibrium. A unique dataset
spanning 14 years with exact timing of price changes for almost all Norwegian gasoline
stations is employed to study a transition led by the largest chain to regular
Monday price jumps, and later a transition led by the second largest chain to additional
Thursday price jumps. By combining the price data with volume and cost
data, I estimate that the transition to more frequent price jumps has a substantial
positive effect on volume-weighted retail margins.

Keywords: price leadership, coordination, retail gasoline, Edgeworth cycles

JEL Classification: K21; D43; L44; L81

Suggested Citation

Tveito, Andreas, Might as well jump! Coordinating on more frequent price hikes in a retail gasoline market (October 25, 2019). University of Bergen, WORKING PAPERS IN ECONOMICS No. 04/19, Available at SSRN: https://ssrn.com/abstract=3475680 or http://dx.doi.org/10.2139/ssrn.3475680

Andreas Tveito (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
41
Abstract Views
426
PlumX Metrics