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Pay cycles and fuel price: a quasi experimental approach

Angela Bergantino, Mario Intini and Jordi Perdiguero
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Mario Intini: Management and Business Law, University of Bari Aldo Moro
Jordi Perdiguero: Universitat Autònoma de Barcelona

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper studies the daily price fixing behaviour of the Spanish fuel stations. Using a difference-in-differences approach, we show that low-cost and independent operators take advantage of needier consumers. Their prices increase on the day the unemployed workers receive their subsidy from the government, whereas, on the same day, branded companies decrease their prices. Retailers, aware of this, raise the price when they know demand increases. This phenomenon emphasises the effect of pay cycles on consumer choices and their related economic impact. Findings are also relevant for Antitrust authorities which generally focus on the activities of major brands’ stations.

Keywords: retail fuel pricing; subsidy recipients; low-cost stations; pay-cycles JEL codes: D12; H53; L11; L22; L40 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-com, nep-ene and nep-eur
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