Asymmetric Pricing Dynamics with Market Power:Investigating Island Data of the Retail Gasoline Market

• 발행기관: 한국재정학회(구 한국재정·공공경제학회)
• 저자명: Woo-Hyung Hong Daeyong Lee
• 간행물 정보: 『한국재정학회 학술대회 논문집』2015년도 추계학술대회 논문집, 1~38쪽, 전체 38쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2015.09.30

영문 초록

It is well-documented that gasoline prices respond more quickly to cost increases than to cost declines. This paper investigates how and why such a link between mar-ket power and asymmetric pricing dynamics occurs. Exploiting a unique station-level panel data set from the Korean retail gasoline market, we propose geographical separa-tion as a reliable measure of market power. Focusing on gas stations located on islands around the peninsula, the measure naturally restricts spatial competition among them, thus providing them with market power. Our findings confirm a positive correlation between market power and price-response asymmetry. In addition, we provide direct evidence of tacit collusion by investigating stations’ sticky pricing behaviors and sug-gest that the tacit collusion is the main channel through which market power influences asymmetric pricing. We further find evidence that tacit collusion plays an important role in determining asymmetric pricing dynamics even in relatively competitive mar-kets. Finally, our analysis shows that market power negatively affects the relationship between margins and price dispersion.

목차

1 Introduction

2 Theoretical predictions: consumer search versus tacit collusion

3 Data and descriptive statistics

4 Econometric model

5 Empirical analysis

6 Alternative explanations

7 Conclusion

키워드

asymmetric pricing market power tacit collusion consumer search sticky pricing