Price Transmission and Local Market Power: Empirical Evidence from the Austrian Gasoline Market

Christoph Weiss, Birgit Koch, Jens-Peter Loy, Carsten Steinhagen

Publikation: Wissenschaftliche FachzeitschriftOriginalbeitrag in FachzeitschriftBegutachtung


We analyse the impact of local market power on price margins and different dimensions of price adjustment dynamics (speed and asymmetry of price transmission) using data for a large number of individual gasoline stations in Austria. Specific attention is paid to threshold effects in price adjustment. Our results clearly suggest that the speed of price transmission between the Brent crude oil index and retail diesel prices is higher in a more competitive environment. While evidence on the relationship between local market power and asymmetries in the speed of price adjustment is mixed, our findings regarding asymmetries in price thresholds are clear: in regions where competition from neighbouring rivals is weak and/or consumers’ price elasticity of demand is low (stations located on the highway), positive thresholds significantly exceed negative ones, which corresponds to the ‘rockets and feathers phenomenon’. As expected, we observe that prices are lower in more competitive local markets.
Seiten (von - bis)5728 - 5746
FachzeitschriftApplied Economics
PublikationsstatusVeröffentlicht - 2018

Österreichische Systematik der Wissenschaftszweige (ÖFOS)

  • 502013 Industrieökonomik