An empirical investigation of the determinants of asymmetric pricing

Marc Remer

International Journal of Industrial Organization, 2015, vol. 42, issue C, 46-56

Abstract: This article empirically investigates the cause of asymmetric pricing: retail prices responding faster to cost increases than decreases. Using daily price data for over 11,000 retail gasoline stations, I find that prices fall more slowly than they rise as a consequence of firms extracting informational rents from consumers with positive search costs. Premium gasoline prices are shown to fall more slowly than regular fuel prices, which supports theories based upon competition with consumer search. Further testing also rejects focal price collusion as an important determinant of asymmetric pricing.

Keywords: Asymmetric pricing; Rockets and feathers; Search costs (search for similar items in EconPapers)
JEL-codes: L10 L20 L40 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718715000739
Full text for ScienceDirect subscribers only

Related works:
Working Paper: An Empirical Investigation of the Determinants of Asymmetric Pricing (2012)
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:eee:indorg:v:42:y:2015:i:c:p:46-56

DOI: 10.1016/j.ijindorg.2015.07.002

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().