The authors review pricing strategies for fueling stations and examine related price differentials within gasoline markets.
Americans drive between thirty to forty miles daily and fill up their automobile gas tanks every two weeks on average. Despite this recurring transaction pattern, there is significant station-level price difference within U.S. retail gasoline markets. These price differences cannot be explained by market structure, retailer characteristics, gasoline brands, geographic differentiation, and market concentration alone.
In this article, authors Carlos Hurtado of the Robins School of Business, University of Richmond, and Julia González of Cornerstone Research identify a strategic asymmetric price cycle that some gas stations use as a pricing strategy. The strategy involves making significant price increases, followed by a sequence of slight price reductions. The authors also examine evidence of the relationship between consumer search habits and gas station pricing strategy.
The article was originally published in Elsevier’s Energy Economics in May 2024.
Chicago
