Do Price Ceilings Enable Tacit Coordination? A Study in Retail Gasoline

About the seminar topic

Price ceilings are commonly used to protect consumers from excessive price increases, yet their unintended consequences remain understudied. This paper examines whether price ceilings in the Belgian retail gasoline market facilitate tacit coordination among firms, potentially distorting competition. Using daily price data from 2016-2019 for around 3,000 gasoline stations, we assess whether price ceilings serve as focal points that encourage coordinated price-setting. Our findings suggest significant coordination due to price ceilings. This coordination does not only occur at the ceilings, but also to focal points below the ceilings. Removing price ceilings enhances competition and reduces consumer prices by around 3%.

Speaker bio

Martin Simon is an Assistant Professor in the Department of Economics at the University of Vienna. He is affiliated with CESifo and CEPR. His research focuses on empirical industrial organisation, with an emphasis on digital economics, information frictions and pricing algorithms.

Dr. Simon completed his PhD at the Vienna Graduate School of Economics in 2019. His work has been published in leading journals such as the RAND Journal of Economics and the International Journal of Industrial Organization. He has also explored topics like algorithmic cooperation, market transparency and consumer search behaviour.

No registration required

For further details, please contact the seminar organiser, Emily Brown.