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Fuel Prices and Station Heterogeneity on Retail Gasoline Markets

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Abstract:
We empirically investigate how and why price levels differ across gasoline stations, using the first full year from a novel panel data set including price quotes from virtually all gas stations in Germany. Our analysis specifically explores the role of station heterogeneity in explaining price differences across gasoline stations. Key determinants of price levels are found to be ex-refinery prices as key input costs, a station's location on roads or highway service areas, and brand recognition. A lower number of station-specific services implies lower fuel price levels, as does a more heterogeneous local competitive environment.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products

JEL Codes: L71: Mining, Extraction, and Refining: Hydrocarbon Fuels, Q42: Alternative Energy Sources, Q41: Energy: Demand and Supply; Prices, D40: Market Structure, Pricing, and Design: General, L11: Production, Pricing, and Market Structure; Size Distribution of Firms, D47: Market Design

Keywords: Gasoline Pricing, Station Heterogeneity, Fuel Prices, Gasoline Stations

DOI: 10.5547/01956574.38.6.jhau

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Published in Volume 38, Number 6 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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