Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Monday, December 24, 2012

An Empirical Investigation of the Determinants of Asymmetric Pricing

Posted by D. Daniel Sokol

Marc Remer (Economic Analysis Group, Antitrust Division, U.S. Department of Justice) An Empirical Investigation of the Determinants of Asymmetric Pricing.

ABSTRACT: This article empirically investigates the cause of asymmetric pricing: retail prices responding faster to cost increases than decreases. Using daily price data for over 11,000 retail gasoline stations, I nd that prices fall more slowly than they rise as a consequence of rms extracting informational rents from consumers with positive search costs. Premium gasoline prices are shown to fall more slowly than regular fuel prices but rise at the same pace, and this pricing pattern supports theories based upon competition with consumer search. Further testing also rejects focal price collusion as an important determinant of asymmetric pricing.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/12/an-empirical-investigation-of-the-determinants-of-asymmetric-pricing.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef017d3e1721cc970c

Listed below are links to weblogs that reference An Empirical Investigation of the Determinants of Asymmetric Pricing:

Comments

Post a comment