Gasoline prices jump up on Mondays: An outcome of aggressive competition?

Frode Steen and Øystein Foros

No 6783, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analyzed similar price cycles in other countries 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 gasoline prices follow a fixed weekly pattern, with prices increasing significantly every Monday at noon, and that gasoline companies appear to use the recommended 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; Intertemporal price discrimination; Price coordination (search for similar items in EconPapers)
JEL-codes: D40 L11 L42 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-com, nep-ene and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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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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