Do pump prices really follow Edgeworth cycles? Evidence from the German retail fuel market

Samuel de Haas (samuel.de-haas@wirtschaft.uni-giessen.de)
Additional contact information
Samuel de Haas: Justus-Liebig-University Giessen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Most of the literature on retail fuel markets find high-frequency and asymmetric price cycles. This is typically explained by the model of Edgeworth price cycles. A key element of this model is that prices fall to marginal costs during a cycle. It seems challenging to address this assumption empirically. However, I use a natural experiment in the German fuel market to analyze the effects of an external cost shock. I find strong evidence that prices do not fall to marginal costs. This is not in line with Edgeworth cycles and thus, should be taken into account when analyzing fuel markets.

Keywords: Edgeworth price cycles; Retail gasoline; Price effects; Natural experiment; Coordination (search for similar items in EconPapers)
JEL-codes: K21 L11 L81 L91 Q41 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2019
New Economics Papers: this item is included in nep-ene, nep-reg and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Forthcoming in

Downloads: (external link)
http://www.uni-marburg.de/fb02/makro/forschung/mag ... /13-2019_de_haas.pdf First 201913 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201913

Access Statistics for this paper

More papers in MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) Contact information at EDIRC.
Bibliographic data for series maintained by Bernd Hayo (hayo@wiwi.uni-marburg.de).