Date of this Version
The Journal of Industrial Economics
We study the collapse of collusion in Québec's retail gasoline market following a Competition Bureau investigation, and show that it involved two empirical regularities: high margins, and asymmetric price adjustments. Using weekly, station-level prices we test whether collusion was successful, and whether asymmetric adjustments were part of the cartel's strategy. We do so in the markets targeted by the investigation, and in markets throughout the province with similar pre-collapse pricing (cyclical markets). Our results suggest that stations in both target and cyclical markets adjusted pricing following the announcement: margins fell (by 30%/15% in target/cyclical markets), and adjustments became more symmetric.
This is the peer reviewed version of the following article: Robert C. Clark, Jean-François Houde (2012), The effect of explicit communication on pricing: Evidence from the collapse of a gasoline retail cartel, Journal of Industrial Economics, which has been published in final form at http://dx.doi.org/10.1111/joie.12042. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms.
Clark, R., & Houde, J. (2014). The Effect of Explicit Communication on Pricing: Evidence From the Collapse of a Gasoline Cartel. The Journal of Industrial Economics, 62 (2), 191-228. http://dx.doi.org/10.1111/joie.12042
Date Posted: 27 November 2017
This document has been peer reviewed.