2020/01/21 by Dieter Pennerstorfer, Philipp Schmidt‐Dengler, Nicolas Schutz +3 · 2 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Consumer Market Behavior and Pricing #Economics of Agriculture and Food Markets #Economic and Environmental Valuation
paper · pdf · doi:10.1111/iere.12443
Abstract Limited information is the key element generating price dispersion in models of homogeneous‐goods markets. We show that the global relationship between information and price dispersion is an inverse‐U shape. We test this mechanism for the retail gasoline market using a new measure of information based on commuter data from Austria. Commuters sample gasoline prices on their commuting route, providing us with spatial variation in the share of informed consumers. Our empirical estimates are in line with the theoretical predictions. We also quantify how information affects average prices paid and the distribution of surplus in the gasoline market.