Does markup regulation restrict price hikes? Evidence from the oil industry

Michael Polemis () and Thanasis Stengos

Letters in Spatial and Resource Sciences, 2023, vol. 16, issue 1, No 15, 11 pages

Abstract: Abstract Using price data on three oil products (gasoline, automotive diesel, and heating oil) that have been recently affected by maximum markup regulation in Greece (March 2022) and employing the prices of the same products in Italy that have not been affected by regulation, we find that employing markup regulation led to a significant increase in both net and final prices equal to 13.8% and 2.4% respectively. The empirical findings postulate that the markup ceiling may act as a focal point for facilitating tacit collusion by monitoring prices and thus enabling a “trigger strategy” mechanism among the market participants in the Greek fuel industry.

Keywords: Difference-in-differences; Competition; Markups; Regulation; Greece (search for similar items in EconPapers)
JEL-codes: C23 L11 L52 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s12076-023-00339-7

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