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  5. Identifying Algorithmic Pricing Technology Adoption in Retail Gasoline Markets

Identifying Algorithmic Pricing Technology Adoption in Retail Gasoline Markets

  • Stephanie Assad
  • Robert Clark
  • Daniel Ershov
  • Lei Xu
AEA Papers and Proceedings
vol. 112, May 2022
(pp. 457-60)
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Abstract

While recent theoretical literature shows that algorithmic pricing (AP) may increase retail prices by facilitating collusive behavior, there has been no empirical evidence relating the adoption of AP technology to higher prices and/or collusion. One key reason is that information about firms' pricing technologies and their adoption of new pricing software is rarely available. In this paper, we use detailed price data from the German retail gasoline market, where AP was supposedly introduced in 2017. We show how to identify changes in pricing technology using structural breaks in pricing behaviors associated with AP.

Citation

Assad, Stephanie, Robert Clark, Daniel Ershov, and Lei Xu. 2022. "Identifying Algorithmic Pricing Technology Adoption in Retail Gasoline Markets." AEA Papers and Proceedings, 112: 457-60. DOI: 10.1257/pandp.20221060

Additional Materials

JEL Classification

  • D21 Firm Behavior: Theory
  • D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
  • L12 Monopoly; Monopolization Strategies
  • L81 Retail and Wholesale Trade; e-Commerce