Discussion Paper

No. 2014-17 | April 10, 2014
Regulating Gasoline Retail Markets: The Case of Germany

Abstract

In 2011, price peaks in retail gasoline prices caused public outrage and attracted the attention of German regulatory agencies. After having examined the market, competition authorities concluded that tacit collusion existed but could not easily be prosecuted under the given competition law. In several other countries, various types of regulatory schemes are implemented to tackle tacit collusive behavior. E.g. there are price ceilings established in Luxembourg or per day limits of price increases given in Austria. However, research has found that none of them has led to satisfactory results. Hence, the following paper proposes a different regulatory approach, i.e. the implementation of corrective taxes. Results show that a special type of variable tax scheme successfully manages to render collusion an unprofitable business. In addition, it is also easy to levy and monitor. Thereby, the inherent vice of the gasoline retail market, i.e. the transparency that enables tacit—and therefore non-prosecutable—collusion, could be turned into a regulatory virtue as it becomes a powerful means to help successfully tackle imperfect competition and to bring about a more efficient market outcome.

JEL Classification

Q48 D42 D43

Cite As

Nadine Wittmann (2014). Regulating Gasoline Retail Markets: The Case of Germany. Economics Discussion Papers, No 2014-17, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2014-17

Assessment



Comments and Questions


Anonymous - Referee Report 1
April 23, 2014 - 09:10

see attached file


Nadine Wittmann - Reply to Referee Report 1dp 2014
April 23, 2014 - 19:27

Author Reply


Anonymous - Referee Report 2
May 20, 2014 - 10:06

see attached file


Nadine Wittmann - Reply to Referee Report 2dp 2014
May 22, 2014 - 17:14

Please refer to attached PDF-file.