The Effects of Gasoline Price Regulations: Experimental Evidence

Haucap, Justus; Müller, H

doi:10.2139/ssrn.2482288

Cited by 14 publications

(17 citation statements)

References 15 publications

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“…For example, in Bundeskartellamt (2011, p.137), a comprehensive study of the German gasoline sector, it is stated that, as competitive structures and incentives are not 1 For example, fuel price regulations are currently in place in Austria, Luxembourg, Western Australia, several Canadian states and Mexico. For further details, see Haucap and Müller (2012), Dewenter and Heimeshoff (2012) and Arteaga and Flores (2010).…”

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confidence: 99%

“…Haucap and Müller (2012) 8 In Fershtman and Fishman (1994), where consumers' search costs are homogeneous, the indirect effect always dominates, implying that the analyzed price regulation aversely affects consumer surplus in the market. Armstrong et al (2009) employ a more general informational structure and allow for search costs to be heterogeneous across consumers.…”

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confidence: 99%

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Austrian-style gasoline price regulation: How it may backfire

Obradovits¹

2014

International Journal of Industrial Organization

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In January 2011, a price regulation was established in the Austrian gasoline market which prohibits firms from raising their prices more than once per day. Similar restrictions have been discussed in New York State and Germany. Despite their intuitive appeal, this article argues that Austrian-type policies may actually harm consumers. In a two-period duopoly model with consumer search, I show that in face of the regulation, firms will distort their prices intertemporally in such a way that their aggregate expected profit remains unchanged. This implies that, as some consumers find it optimal to delay their purchase due to expected price savings, but find it inconvenient to do so, a friction is introduced that decreases net consumer surplus in the market.

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Austrian-style gasoline price regulation: How it may backfire

Obradovits¹

2014

International Journal of Industrial Organization

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“…Without collusion, companies arrive at a standard Bertrand oligopoly outcome with zero profits, given the homogenous nature of the product in question (Haucap and Müller 2012). Naturally, this standard result implicitly implies some simplifying assumptions, e.g.…”

Section: Results Without Regulation Against Collusive Behaviormentioning

confidence: 99%

“…Within the entire price range On the whole, demand within retail gasoline markets has proven to be rather inelastic (Haucap andMueller 2012, Schendel andBalestra 1969). However, it is certainly not perfectly inelastic along the entire range of the demand function.…”

Section: Demandmentioning

confidence: 99%

Regulating Gasoline Retail Markets: The Case of Germany

Wittmann

2014

Economics

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In 2011, price peaks in retail gasoline prices caused public outrage and attracted the attention of German regulatory agencies. After having examined the market, competition authorities concluded that tacit collusion existed but could not easily be prosecuted under given competition law. In several other countries, various types of regulatory schemes are implemented to tackle tacit collusive behavior, e.g., there are price ceilings established in Luxembourg or per day limits of price increases given in Austria. However, research has found that none of them has led to satisfactory results. Hence, the following paper proposes a different regulatory approach, i.e., the implementation of corrective taxes. Results show that a specially tailored tax on price successfully manages to render collusion an unprofitable business by collecting marginal profits and that the inherent vice of the gasoline retail market, i.e., the transparency that enables tacit-and therefore non-prosecutable-collusion, could be turned into a regulatory virtue as it becomes a powerful means to help successfully tackle imperfect competition and to bring about a more efficient market outcome. JEL Q48 D42 D43

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“…When we insert the γ G defined in (47) into this equation, we can derive the total effect of changes in the level of the expected fine for the equilibrium number of firms:…”

Section: Stage 2: Firms Decide Whether or Not To Enter The Industrymentioning

confidence: 99%

Design standards and technology adoption: welfare effects of increasing environmental fines when the number of firms is endogenous

Baumann¹,

Friehe

2016

Environ Econ Policy Stud

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editor. Terms of use: Documents in Design Standards and Technology Adoption: Welfare Effects of Increasing Environmental Fines when the Number of Firms is EndogenousFlorian Baumann * Tim Friehe † September 2013Abstract This paper examines the consequences of an increase in the expected fine for non-compliance with an environmental design standard for an industry with Cournot competition and free entry. Our analysis is quite timely, given recent policy proposals to raise environmental fines. We describe the range in which changes in the environmental fine have no consequences, and detail the various other effects that emerge. It is established that an increase in the expected fine for non-compliance may have adverse welfare consequences, while it always serves the purpose of inducing a greater share of firms to adopt the prescribed technology.

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The Effects of Gasoline Price Regulations: Experimental Evidence

Cited by 14 publications

References 15 publications

Austrian-style gasoline price regulation: How it may backfire

Austrian-style gasoline price regulation: How it may backfire

Regulating Gasoline Retail Markets: The Case of Germany

Design standards and technology adoption: welfare effects of increasing environmental fines when the number of firms is endogenous

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