Citation

Discussion Paper Details

Please find the details for DP6783 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Gasoline prices jump up on Mondays: An outcome of aggressive competition?

Author(s): Øystein Foros and Frode Steen

Publication Date: April 2008

Keyword(s): gasoline, intertemporal price discrimination and price coordination

Programme Area(s): Industrial Organization

Abstract: This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analyzed similar price cycles in other countries find support for the Edgeworth cycle theory (Maskin and Tirole, 1988), we demonstrate that Norwegian gasoline price cycles involve a form of coordinated behavior. We also show that gasoline prices follow a fixed weekly pattern, with prices increasing significantly every Monday at noon, and that gasoline companies appear to use the recommended price as a coordination device with a fixed link between the retail and recommended prices. Moreover, the weekly pattern changed in April 2004; whereas Thursday had been the high-price day, Monday now became the high-price day. The price?cost margin also increased significantly after the weekly pattern changed in April 2004.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6783

Bibliographic Reference

Foros, Ø and Steen, F. 2008. 'Gasoline prices jump up on Mondays: An outcome of aggressive competition?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6783