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Consumer Information and Price Transmission: Empirical Evidence

Jens-Peter Loy, Dieter Pennerstorfer (), Daniela Rroshi (), Christoph Weiss () and Biliana Yontcheva

No 2019-20, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We investigate how consumer information affects price adjustment in the Austrian retail gasoline market. Our measure of consumer information is obtained from detailed census data on commuting behavior, as commuters can freely sample prices on their commuting route and are thus better informed about prices. A threshold error-correction model suggests that prices adjust more quickly if cost shocks exceed certain thresholds. Parametric and semiparametric regressions show that a larger share of informed consumers increases both transmission speed and pass-through elasticity. Better informed consumers reduce the asymmetry in thresholds, but have no effect on the asymmetry in the speed of adjustment.

Keywords: Price Transmission; Consumer Information; Commuters; Gasoline Market; Threshold Error-Correction Model (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-agr, nep-com, nep-ene, nep-eur and nep-reg
Note: English
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