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Edgeworth cycles revisited

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  • Doyle, Joseph
  • Muehlegger, Erich
  • Samphantharak, Krislert

Abstract

Some gasoline markets exhibit remarkable price cycles, where price spikes are followed by a series of small price declines: a pattern consistent with a model of Edgeworth cycles described by Maskin and Tirole. We extend the model and empirically test its predictions with a new dataset of daily station-level prices in 115 US cities. Consistent with the theory, and often in contrast with previous empirical work, we find the least and most concentrated markets are much less likely to exhibit cycling behavior both within and across cities; areas with more independent convenience-store gas stations are also more likely to cycle.

Suggested Citation

  • Doyle, Joseph & Muehlegger, Erich & Samphantharak, Krislert, 2010. "Edgeworth cycles revisited," Energy Economics, Elsevier, vol. 32(3), pages 651-660, May.
    • Handle: RePEc:eee:eneeco:v:32:y:2010:i:3:p:651-660
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    More about this item

    Keywords

    Gasoline prices Edgeworth cycles Retail competition;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General

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