Endogenous price commitment, sticky and leadership pricing: Evidence from the Italian petrol market

Andreoli-Versbach, Patrick ; Franck, Jens-Uwe

URL: http://epub.ub.uni-muenchen.de/16182/1/AndreoliVer...
Document Type: Working paper
Year of publication: 2013
The title of a journal, publication series: Munich Discussion Paper
Volume: 2013-9
Page range: 32-40
Place of publication: München
Publishing house: Max-Planck-Institut für Innovation und Wettbewerb
Publication language: English
Institution: School of Law and Economics > Bürgerl. Recht, Handels- u. Kartellrecht (Franck 2014-)
Subject: 340 Law
Abstract: This article studies dynamic pricing strategies in the Italian gasoline market before and after the market leader unilaterally announced its commitment to adopt a sticky-pricing policy. Using daily Italian firm level prices and weekly average EU prices, we show that the effect of the new policy was twofold. First, it facilitated price alignment and coordination on price changes. After the policy change, the observed pricing pattern shifted from cost-based to sticky-leadership pricing. Second, using a dif-in-dif estimation and a synthetic control group, we show that the causal effect of the new policy was to significantly increase prices through sticky-leadership pricing. Our paper highlights the importance of price-commitment by a large firm in order to sustain (tacit) collusion.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.

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