Abstract
We examine the relationship between information and price dispersion in the retail gasoline market. We first show that the clearinghouse models in the spirit Stahl (1989) generate an inverted-U relationship between information and price dispersion. Past
empirical studies of this relationship have relied on (intertemporal) variation in internet
usage and adoption to measure the number of consumers that have access to the clearinghouse. We construct a new measure of information based commuter data from Austria. Regular commuters can freely sample gasoline prices on their commuting route, giving us spatial variation in the share of informed consumers. We use detailed information on gas station level price to construct various measures of price dispersion.
Our empirical estimates of the relationship are in line with the theoretical predictions.
empirical studies of this relationship have relied on (intertemporal) variation in internet
usage and adoption to measure the number of consumers that have access to the clearinghouse. We construct a new measure of information based commuter data from Austria. Regular commuters can freely sample gasoline prices on their commuting route, giving us spatial variation in the share of informed consumers. We use detailed information on gas station level price to construct various measures of price dispersion.
Our empirical estimates of the relationship are in line with the theoretical predictions.
| Original language | English |
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| Publication status | Published - 1 Jun 2013 |