Dynamic pricing in retail gasoline markets
نویسندگان
چکیده
world, all available information is used, price wars never happen, and the collusive constraint is always binding. This cannot be taken as a serious description of the world of gasoline retailing. It is plausible, however, that station operators, for example, recognize that reducing their own prices induces price cutting at rival stations. They also might reasonably expect that once price cutting begins it will take some time to return to higher margins even without a clearly articulated strategy for the length and severity of the retaliation. Recognizing this, each seller might very well be less willing to cut price if the resulting retaliation will occur when market conditions make it particularly costly. Tacit collusion of this sort can produce the dynamic pricing pattern we find.
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