The impact of the market transparency unit for fuels on gasoline prices in Germany

ABSTRACT

Increasing horizontal as well as vertical transparency in oligopolistic markets can be advantageous for consumers, due to reduced search costs. However, market transparency can also affect incentives to deviate from collusive agreements and the punishment by rival firms in the market. Using a panel of 27 European countries, we analyse the impact of increased market transparency via the introduction of a market transparency unit for fuels in Germany. Applying a difference-in-differences approach, we find evidence that both gasoline and diesel prices have increased. While consumers may be better off using a retail price app for fuels, gas stations are also able to compare prices at almost no cost.

KEYWORDS:

• Market transparency unit
• regulation
• fuel prices
• difference-in-differences

JEL CLASSIFICATION:

• L13
• L41
• Q41

Acknowledgement

We thank the participants of the 2016 meeting of the Workgroup Competition of the Verein fuer Socialpolitik (German Economic Association) for helpful comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Up to January 2016, 49 so-called consumer information service providers running websites and smart phone apps were available.

² For the importance of information sharing in competition policy, see Kühn (2001).

³ Belgium, Bulgaria, Cyprus, Czech Republic, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg, Latvia, Malta, The Netherlands, Poland, Portugal, Romania, Sweden, Slovenia, Slovakia, Spain and the United Kingdom.

⁴ Since 2011, Austrian gas stations are allowed to raise prices only once a day. Additionally, Austria has introduced a transparency unit. Dewenter and Heimeshoff (2012) found that regulations (not the introduction of the transparency unit) led to a significant decrease in prices.