Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Does markup regulation restrict price hikes? Evidence from the oil industry

Does markup regulation restrict price hikes? Evidence from the oil industry Using price data on three oil products (gasoline, automotive diesel, and heating oil) that have been recently affected by maximum markup regulation in Greece (March 2022) and employing the prices of the same products in Italy that have not been affected by regulation, we find that employing markup regulation led to a significant increase in both net and final prices equal to 13.8% and 2.4% respectively. The empirical findings postulate that the markup ceiling may act as a focal point for facilitating tacit collusion by monitoring prices and thus enabling a “trigger strategy” mechanism among the market participants in the Greek fuel industry. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Letters in Spatial and Resource Sciences Springer Journals

Does markup regulation restrict price hikes? Evidence from the oil industry

Download PDF
11 pages

Loading next page...
 
/lp/springer-journals/does-markup-regulation-restrict-price-hikes-evidence-from-the-oil-tM4zCdna0o
Publisher
Springer Journals
Copyright
Copyright © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2023. Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
ISSN
1864-4031
eISSN
1864-404X
DOI
10.1007/s12076-023-00339-7
Publisher site
See Article on Publisher Site

Abstract

Using price data on three oil products (gasoline, automotive diesel, and heating oil) that have been recently affected by maximum markup regulation in Greece (March 2022) and employing the prices of the same products in Italy that have not been affected by regulation, we find that employing markup regulation led to a significant increase in both net and final prices equal to 13.8% and 2.4% respectively. The empirical findings postulate that the markup ceiling may act as a focal point for facilitating tacit collusion by monitoring prices and thus enabling a “trigger strategy” mechanism among the market participants in the Greek fuel industry.

Journal

Letters in Spatial and Resource Sciences – Springer Journals

Published: Dec 1, 2023

Keywords: Difference-in-differences; Competition; Markups; Regulation; Greece; L52; L11; C23

References

  • Using the longitudinal structure of earnings to estimate the effect of training programs
    Ashenfelter, O; Card, D
  • The price effects of a large merger of manufacturers: a case study of Maytag-Whirlpool
    Ashenfelter, OC; Hosken, DS; Weinberg, MC
  • The impact of maximum markup regulation on prices
    Genakos, C; Koutroumpis, P; Pagliero, M
  • Specification tests in econometrics
    Hausman, JA
  • Focal point pricing: a challenge to the successful implementation of Section 10A (introduced by the Competition Amendment Act)
    Holland, M; Rossouw, J; Staples, J
  • Focal points in tacit bargaining; experimental evidence
    Isoni, A; Poulsen, A; Sugden, R; Tsutsui, K
  • Price ceilings as focal points for tacit collusion: evidence from credit cards
    Knittel, RK; Stango, V
  • The petroleum products market in Greece: a review of the current situation and prospects
    Mavragani, E
  • Fuel market developments in Greece and Italy: a comparative assessment
    Sotiriou, S; Mavragani, E; Filiou, E; Kavoura, A