Price cycles in the German retail gasoline market - Competition or collusion?

Abstract

This paper analyses the cyclical price setting behavior of petrol stations in the German retail gasoline market. High frequency price cycles can be observed, as gasoline stations undercut each other successively in price over the day followed by a sharp increase in price in the evening. These asymmetric price cycles are compared with theoretical Edgeworth cycles whereby some differences and contradictions are identified. The results of the empirical analysis suggest a strategy of intertemporal price discrimination between different types of consumers. Gasoline stations undercut each other successively over the day to attract consumers with price-elastic demand. However, this undercutting phase is stopped by simultaneous price increases to exploit the inflexible and price-inelastic consumers. 

Beteiligte Personen

• M.Sc. Melissa Bantle