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Competition on the fast lane: The price structure of homogeneous retail gasoline stations

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  • Korff, Alex

Abstract

This paper studies the relationship between retail gasoline pricing strategies and potential demand. Utilising detailed data on traffic on the German Autobahn and the special case of Bundesautobahntankstellen, the interaction between demand and price competition is studied, as are the changes in competition intensity across distances and road networks. The observed relationships match an Edgeworth cycling behaviour, whose steps appear to be determined by the changes in demand. Cycling intensity and undercutting increase with traffic, while relenting phases are timed to substantial changes in traffic ows. Thus, competition is found to intensify with rising potential demand, as that increases the incentives of undercutting.

Suggested Citation

  • Korff, Alex, 2021. "Competition on the fast lane: The price structure of homogeneous retail gasoline stations," DICE Discussion Papers 359, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:359
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    References listed on IDEAS

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    Cited by:

    1. Fischer, Kai, 2022. "Alcohol prohibition and pricing at the pump," DICE Discussion Papers 386, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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    More about this item

    Keywords

    Retail gasoline prices; Edgeworth Cycles; Regional Infrastructure; Price Competition;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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