Asymmetric pass-through and competition

Genakos, Christos, Lyu, Blair Yuan and Pagliero, Mario (2024) Asymmetric pass-through and competition. CEP Discussion Papers (CEPDP2028). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

Text - Published Version Download (1MB)

• https://cep.lse.ac.uk/_new/publications/...

Abstract

We study the retail price pass-through of four major tax changes in petroleum products using daily pricing data from gas stations on small Greek islands. We find that (i) the pass-through of the tax hikes is five times higher than for the tax decrease, (ii) the pass-through of the tax hikes increases with competition, while that of the tax decrease does not, (iii) there is significant asymmetry in the speed of price adjustments, and,(iv) the asymmetric price adjustment cannot be explained by tacit collusion, instead the evidence suggests that search is the most plausible explanation.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H22 - Incidence L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
Date Deposited:	13 Feb 2025 16:06
Last Modified:	13 Feb 2025 16:06
URI:	http://eprints.lse.ac.uk/id/eprint/126788

Actions (login required)

View Item