Ruhr Economic Papers

Ruhr Economic Papers #810

Increased Market Transparency in Germany’s Gasoline Market: What about Rockets and Feathers?

by Manuel Frondel, Marco Horvath, Colin Vance and Alexander Kihm

RGS, RUB, RWI, 08/2019, 28 S./p., 8 Euro, ISBN 978-3-86788-939-1 DOI: 10.4419/86788939

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Abstract

Drawing on panel data on daily fuel prices covering over 5,000 filling stations in Germany, this paper
documents a change in the stations’ price setting behavior following the introduction of a legally mandated
online price portal in 2013. Prior to the portal, positive asymmetry is found on the basis of error correction
models, with prices following the “rockets and feathers” pattern that is typically found for fuels. In the
aftermath of the portal, by contrast, negative asymmetry is observed: fuel price decreases in response to
refinery price decreases are stronger than fuel price increases due to refinery price increases.

JEL-Classification: D12, Q41

Keywords: Retail markets; competition; error correction model

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