Recent literature shows that in the US gasoline prices are higher in locations using more odd prices (particularly those ending in five and nine digits), since they coarse the pricing grid and act as a focal collusive point. We replicate this analysis for the Italian market, obtaining the opposite result. Since the rightmost digit of the retail gasoline prices in Italy is the third and not the second decimal place, coarsening the pricing grid is not sufficient to support a collusive behaviour.
Third decimal place odd prices trigger competition: evidence from the Italian retail gasoline market / M. Alderighi, M. Nicolini. - In: APPLIED ECONOMICS LETTERS. - ISSN 1350-4851. - 26:2(2019), pp. 143-146. [10.1080/13504851.2018.1441502]
Third decimal place odd prices trigger competition: evidence from the Italian retail gasoline market
M. AlderighiPrimo
;
2019
Abstract
Recent literature shows that in the US gasoline prices are higher in locations using more odd prices (particularly those ending in five and nine digits), since they coarse the pricing grid and act as a focal collusive point. We replicate this analysis for the Italian market, obtaining the opposite result. Since the rightmost digit of the retail gasoline prices in Italy is the third and not the second decimal place, coarsening the pricing grid is not sufficient to support a collusive behaviour.
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