Third decimal place odd prices trigger competition: evidence from the Italian retail gasoline market

Marco Alderighi and Marcella Nicolini

Applied Economics Letters, 2019, vol. 26, issue 2, 143-146

Abstract: Recent literature shows that in the US gasoline prices are higher in locations using more odd prices (particularly those ending in five and nine digits), since they coarse the pricing grid and act as a focal collusive point. We replicate this analysis for the Italian market, obtaining the opposite result. Since the rightmost digit of the retail gasoline prices in Italy is the third and not the second decimal place, coarsening the pricing grid is not sufficient to support a collusive behaviour.

Date: 2019
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DOI: 10.1080/13504851.2018.1441502

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