Gasoline Prices Jump Up on Mondays: An Outcome of Aggressive Competition?

Øystein Foros and Frode Steen

No 08-20, Working Papers from Centre for Competition Policy, University of East Anglia

Abstract: This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analysed similar price cyclees in other countriees 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 gasline prices follow a fixed weekly pattern, with prices increasing significantly every Monday at noon, and that gasoline companies appear to use the recommended retail 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.

Keywords: gasoline prices; coordinated behavior (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008-03
New Economics Papers: this item is included in nep-com, nep-ene and nep-ind
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http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP08-20.pdf (application/pdf)

Related works:
Working Paper: Gasoline prices jump up on Mondays: An outcome of aggressive competition? (2009)
Working Paper: Gasoline prices jump up on Mondays: An outcome of aggressive competition? (2008)
Working Paper: Gasoline Prices Jump Up on Mondays: an Outcome of Aggressive Competition? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ccp:wpaper:wp08-20

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