Authors: Frondel, Manuel
Horvath, Marco
Vance, Colin
Kihm, Alexander
Title: Increased market transparency in Germany’s gasoline market: The death of rockets and feathers?
Language (ISO): en
Abstract: Drawing on a consumer search model and a unique panel data set of daily fuel prices covering over 5,000 fuel stations in Germany, this paper documents a change in the price setting behavior of retail gas stations following the introduction of a legally mandated on-line price portal. Prior to the introduction of the portal in 2013, positive asymmetry is found on the basis of error correction models, with prices following the “rockets and feathers” pattern documented in many commodity markets, particularly in retail markets for fuels. In the aftermath of the portal’s introduction, by contrast, negative asymmetry is observed: fuel price decreases in response to refinery price decreases are stronger than fuel price increases due to refinery price increases. This reversal in price pass-through, which is found among both branded and unbranded stations, suggests welfare gains for consumers from increased market transparency.
Subject Headings: retail markets
error correction model
Subject Headings (RSWK): Kraftstoffpreis
Issue Date: 2018
Appears in Collections:Sonderforschungsbereich (SFB) 823

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