Search and equilibrium prices : theory and evidence from retail diesel

Luís Cabral, Dominik Schober, and Oliver Woll

We examine the relation between consumer search and equilibrium prices when collusion is endogenously determined. We develop a theoretical model and show that average price is a U-shaped function of the measure of searchers: prices are highest when there are no searchers (local monopoly power) or when there are many searchers (and sellers opt to collude). We test this prediction with diesel retail prices in Dortmund, Germany. We estimate a U-shaped relation with statistical precision and a €.025/liter price variation due to the variation in the measure of searchers.

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Year of publication:	2019 ; This version: March 27, 2019
Authors:	Cabral, Luís M. B. ; Schober, Dominik ; Woll, Oliver
Publisher:	Mannheim, Germany : ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung GmbH Mannheim
Subject:	Collusion \| Cartelization \| Fuel Retailing \| Search \| Competitive Intensity \| Einzelhandel \| Retail trade \| Kartell \| Cartel \| Informationskosten \| Information costs \| Benzinpreis \| Gasoline price \| Theorie \| Theory \| Wettbewerbsbeschränkung \| Restraints of competition \| Preismanagement \| Pricing strategy \| Deutschland \| Germany \| Wettbewerb \| Competition

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Extent:	1 Online-Ressource (27 Seiten) Illustrationen
Series:	Discussion paper. - [Mannheim] : [ZEW], ZDB-ID 2985404-0. - Vol. no. 19-018 (05/2019)
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/196899 [Handle]
Classification:	L1 - Market Structure, Firm Strategy, and Market Performance ; L4 - Antitrust Policy ; L5 - Regulation and Industrial Policy ; L9 - Industry Studies: Transportation and Utilities
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012007152