Information and Price Dispersion: Theory and Evidence

Philipp Schmidt-Dengler, Nicolas Schutz, Christoph Weiss, Dieter Pennerstorfer and Biliana Yontcheva

No 10771, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We examine the relationship between information and price dispersion in the retail gasoline market. We first show that the clearinghouse models in the spirit of Stahl (1989) generate an inverted-U relationship between information and price dispersion. We construct a new measure of information based on precise commuter data from Austria. Regular commuters can freely sample gasoline prices on their commuting route, providing us with spatial variation in the share of informed consumers. We use detailed information on gas station level prices to construct price dispersion measures. Our empirical estimates of the relationship are in line with the theoretical predictions.

Keywords: Commuter data; Price dispersion; Retail gasoline; Search (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-com, nep-ene, nep-ger, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: INFORMATION AND PRICE DISPERSION: THEORY AND EVIDENCE (2020)
Working Paper: Information and Price Dispersion. Theory and Evidence (2015)
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