Discussion Paper Details

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Title: The Impact of Maximum Markup Regulation on Prices

Author(s): Christos D. Genakos, Pantelis Koutroumpis and Mario Pagliero

Publication Date: November 2014

Keyword(s): markup regulation, markups and policy evaluation

Programme Area(s): Industrial Organization

Abstract: We study the repeal of a regulation that imposed maximum wholesale and retail markups for all but five fresh fruits and vegetables. We compare the prices of products affected by regulation before and after the policy change and use the unregulated products as a control group. We find that abolishing regulation led to a significant decrease in both retail and wholesale prices. However, markup regulation affected wholesalers directly and retailers only indirectly. The results are consistent with markup ceilings providing a focal point for collusion among wholesalers.

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Bibliographic Reference

Genakos, C, Koutroumpis, P and Pagliero, M. 2014. 'The Impact of Maximum Markup Regulation on Prices'. London, Centre for Economic Policy Research.