Problem definition: We study a monopolistic robust pricing problem in which the seller does not know the customers’ valuation distribution for a product but knows its mean and variance. Academic/practical relevance: This minimal requirement for information means that the pricing managers only need to be able to answer two questions: How much will your targeted customers pay on average? To measure your confidence in the previous answer, what is the standard deviation of customer valuations? Methodology: We focus on the maximin profit criterion and derive distribution-free upper and lower bounds on the profit function. Results: By maximizing the tight profit lower bound, we obtain the optimal robust price in closed form as well as its distribution-free, worst-case performance bound. We then extend the single-product result to study the robust pure bundle pricing problem where the seller only knows the mean and variance of each product, and we provide easily verifiable, distribution-free, sufficient conditions that guarantee the pure bundle to be more robustly profitable than à la carte (i.e., separate) sales. We further derive a distribution-free, worst-case performance guarantee for a heuristic scheme in which customers choose between buying either a single product or a pure bundle. Moreover, we generalize separate sales and pure bundling to a scheme called clustered bundling that imposes a price for each part (i.e., cluster) of a partition of all products and allows customers to choose one or multiple parts (i.e., clusters), and we provide various algorithms to compute clustered bundling heuristics. In parallel, most of our results hold for the minimax relative regret criterion as well. Managerial implications: The robust price for a single product is in closed form under the maximin profit or minimax relative regret criterion and hence, is easily computable. Its interpretation can be easily explained to pricing managers. We also provide efficient algorithms to compute various mixed bundling heuristics for the multiproduct problem.
{"title":"Distribution-Free Pricing","authors":"Hongqiao Chen, Ming Hu, G. Perakis","doi":"10.2139/SSRN.3090002","DOIUrl":"https://doi.org/10.2139/SSRN.3090002","url":null,"abstract":"Problem definition: We study a monopolistic robust pricing problem in which the seller does not know the customers’ valuation distribution for a product but knows its mean and variance. Academic/practical relevance: This minimal requirement for information means that the pricing managers only need to be able to answer two questions: How much will your targeted customers pay on average? To measure your confidence in the previous answer, what is the standard deviation of customer valuations? Methodology: We focus on the maximin profit criterion and derive distribution-free upper and lower bounds on the profit function. Results: By maximizing the tight profit lower bound, we obtain the optimal robust price in closed form as well as its distribution-free, worst-case performance bound. We then extend the single-product result to study the robust pure bundle pricing problem where the seller only knows the mean and variance of each product, and we provide easily verifiable, distribution-free, sufficient conditions that guarantee the pure bundle to be more robustly profitable than à la carte (i.e., separate) sales. We further derive a distribution-free, worst-case performance guarantee for a heuristic scheme in which customers choose between buying either a single product or a pure bundle. Moreover, we generalize separate sales and pure bundling to a scheme called clustered bundling that imposes a price for each part (i.e., cluster) of a partition of all products and allows customers to choose one or multiple parts (i.e., clusters), and we provide various algorithms to compute clustered bundling heuristics. In parallel, most of our results hold for the minimax relative regret criterion as well. Managerial implications: The robust price for a single product is in closed form under the maximin profit or minimax relative regret criterion and hence, is easily computable. Its interpretation can be easily explained to pricing managers. We also provide efficient algorithms to compute various mixed bundling heuristics for the multiproduct problem.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122318734","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider a duopolistic market in which a green firm competes with a brown rival and each firm sells two quality-differentiated products. We study optimal non-linear contracts offered by the two firms when consumers: (i) Are privately informed about their willingness to pay for quality, and (ii) differ in their environmental consciousness. We characterize how consumers with different valuations for quality self-select into firms and show that the ranking of qualities, relative prices and profits all depend on the interplay between consumers’ valuations and firms’ cost heterogeneity. Interestingly, when consumers’ valuations for quality are relatively low, the brown firm does not offer a low-quality variety. This contrasts with the situation of full information, in which both firms commercialize a high- and a low-quality variety. Hence, the lack of information about consumers’ valuations may not only favor the green firm in terms of higher prices and profits, but also reduce the product range offered by the brown rival.
{"title":"Non-Linear Pricing and Conscious Consumption","authors":"Nadia Burani, A. Mantovani","doi":"10.2139/ssrn.3465981","DOIUrl":"https://doi.org/10.2139/ssrn.3465981","url":null,"abstract":"We consider a duopolistic market in which a green firm competes with a brown rival and each firm sells two quality-differentiated products. We study optimal non-linear contracts offered by the two firms when consumers: (i) Are privately informed about their willingness to pay for quality, and (ii) differ in their environmental consciousness. We characterize how consumers with different valuations for quality self-select into firms and show that the ranking of qualities, relative prices and profits all depend on the interplay between consumers’ valuations and firms’ cost heterogeneity. Interestingly, when consumers’ valuations for quality are relatively low, the brown firm does not offer a low-quality variety. This contrasts with the situation of full information, in which both firms commercialize a high- and a low-quality variety. Hence, the lack of information about consumers’ valuations may not only favor the green firm in terms of higher prices and profits, but also reduce the product range offered by the brown rival.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"208 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123334170","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The current literature on pricing in service systems with time-sensitive customers predominately ignores the rational abandonment of customers with mixed-risk attitudes. The goal of this paper is to address this gap. We consider an unobservable queueing system with a nonlinear waiting cost function, which is concave up to a certain point and then becomes convex, capturing the mixed-risk attitude of customers observed in empirical studies. We assume that customers are sensitive with respect to waiting time (delay) and strategic regarding their balking and abandonment decisions. We characterize the optimal pricing policy that maximizes the service provider's revenue. We show that the pricing policies studied in the literature, including the joint service and cancellation (entrance) fee policy, are suboptimal and cannot induce socially optimal behavior. We demonstrate that while the cancellation fee can regulate a customer's balking strategy, the service fee cannot effectively control a customer's abandonment decision. We then provide conditions under which the joint service and cancellation fee policy is optimal. We finally prove that the service provider should compensate customers for their waiting in order to efficiently control the abandonment of customers. We propose a pricing policy, which includes entrance, service, and wait time (delay) fees, that maximize the provider's revenue. We derive the optimal fees and show that, under the proposed optimal pricing policy, customers pay service and cancellation fees while they are partially compensated for the time spent waiting for service.
{"title":"Pricing in Service Systems with Rational Balking and Abandonment of Time-Sensitive Customers","authors":"Hossein Abouee Mehrizi, R. Konrad","doi":"10.2139/ssrn.3464899","DOIUrl":"https://doi.org/10.2139/ssrn.3464899","url":null,"abstract":"The current literature on pricing in service systems with time-sensitive customers predominately ignores the rational abandonment of customers with mixed-risk attitudes. The goal of this paper is to address this gap. We consider an unobservable queueing system with a nonlinear waiting cost function, which is concave up to a certain point and then becomes convex, capturing the mixed-risk attitude of customers observed in empirical studies. We assume that customers are sensitive with respect to waiting time (delay) and strategic regarding their balking and abandonment decisions. We characterize the optimal pricing policy that maximizes the service provider's revenue. We show that the pricing policies studied in the literature, including the joint service and cancellation (entrance) fee policy, are suboptimal and cannot induce socially optimal behavior. We demonstrate that while the cancellation fee can regulate a customer's balking strategy, the service fee cannot effectively control a customer's abandonment decision. We then provide conditions under which the joint service and cancellation fee policy is optimal. We finally prove that the service provider should compensate customers for their waiting in order to efficiently control the abandonment of customers. We propose a pricing policy, which includes entrance, service, and wait time (delay) fees, that maximize the provider's revenue. <br>We derive the optimal fees and show that, under the proposed optimal pricing policy, customers pay service and cancellation fees while they are partially compensated for the time spent waiting for service.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125967336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider platform competition in the presence of small users and a usergroup. One platform enjoys a quality advantage and the other benefits from favorable beliefs. We study whether the group mitigates the users' coordination problem i.e., joining a low-quality platform because they believe that other users would do the same. We find that when the group is sufficiently large to facilitate coordination on the high-quality platform, the group may choose to join the low-quality one. When the group joins the more efficient platform it does not necessarily increase consumer surplus. Specifically, a non-group user benefits from a group with an intermediate size, and prefers a small group over a large group. The utility of a group user is also non-monotonic in the size of the group.
{"title":"Group Hug: Platform Competition with User-Groups","authors":"Sarit Markovich, Y. Yehezkel","doi":"10.2139/ssrn.3468410","DOIUrl":"https://doi.org/10.2139/ssrn.3468410","url":null,"abstract":"We consider platform competition in the presence of small users and a usergroup. One platform enjoys a quality advantage and the other benefits from favorable beliefs. We study whether the group mitigates the users' coordination problem i.e., joining a low-quality platform because they believe that other users would do the same. We find that when the group is sufficiently large to facilitate coordination on the high-quality platform, the group may choose to join the low-quality one. When the group joins the more efficient platform it does not necessarily increase consumer surplus. Specifically, a non-group user benefits from a group with an intermediate size, and prefers a small group over a large group. The utility of a group user is also non-monotonic in the size of the group.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127722026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J. Bono, Allan T. Ingraham, Shreyas Ravi, William K. Schwartz, Christopher Sojourner
The 600 MHz auction conducted by Innovation, Science, and Economic Development (ISED) in Canada was a Combinatorial Clock Auction (CCA) that used a spectrum set-aside to prevent three large national wireless providers—specifically, Bell, Rogers, and Telus—from winning the entirety of the spectrum at auction. The product space was divided into 16 geographic areas, and seven 2x5 MHz block were available in each area. Within the context of the ISED consultation regarding auction design for the 3500 MHz tender, respondents have commented on certain aspects of the 600 MHz auction design as it relates to the set-aside and to price determination in the 600 MHz auction. The purpose of this paper is to provide interested parties with an accurate understanding of pricing in the Canadian 600 MHz auction of 2019. This paper does not take a position on any proposed design elements of the 3500 MHz auction in Canada. We find that set-aside eligible bidders in the 600 MHz auction did not significantly affect the base prices that Rogers or Telus paid for 600 MHz spectrum. In addition, an examination of clock round bidding behavior shows that open prices did not increase significantly due to bidding from set-aside eligible bidders.
{"title":"An Analysis of Allocation Phase Pricing and Clock Round Price Increases in the Canadian 600 MHz Auction","authors":"J. Bono, Allan T. Ingraham, Shreyas Ravi, William K. Schwartz, Christopher Sojourner","doi":"10.2139/ssrn.3463933","DOIUrl":"https://doi.org/10.2139/ssrn.3463933","url":null,"abstract":"The 600 MHz auction conducted by Innovation, Science, and Economic Development (ISED) in Canada was a Combinatorial Clock Auction (CCA) that used a spectrum set-aside to prevent three large national wireless providers—specifically, Bell, Rogers, and Telus—from winning the entirety of the spectrum at auction. The product space was divided into 16 geographic areas, and seven 2x5 MHz block were available in each area. Within the context of the ISED consultation regarding auction design for the 3500 MHz tender, respondents have commented on certain aspects of the 600 MHz auction design as it relates to the set-aside and to price determination in the 600 MHz auction. The purpose of this paper is to provide interested parties with an accurate understanding of pricing in the Canadian 600 MHz auction of 2019. This paper does not take a position on any proposed design elements of the 3500 MHz auction in Canada. We find that set-aside eligible bidders in the 600 MHz auction did not significantly affect the base prices that Rogers or Telus paid for 600 MHz spectrum. In addition, an examination of clock round bidding behavior shows that open prices did not increase significantly due to bidding from set-aside eligible bidders.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121491844","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study shows that retailers are likely to exploit their control over product selections as a negotiation tool.
这项研究表明，零售商可能会利用他们对产品选择的控制作为谈判工具。
{"title":"Determinants of Channel Profitability: Retailers' Control over Product Selections as Contracting Leverage","authors":"Sylvia Hristakeva","doi":"10.2139/ssrn.3625706","DOIUrl":"https://doi.org/10.2139/ssrn.3625706","url":null,"abstract":"This study shows that retailers are likely to exploit their control over product selections as a negotiation tool.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125552018","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Analysis of efficiency in legal fields from contracts to competition assumes that a consumer’s demand depends on the price the consumer faces, not on the prices a firm charges other customers. This project provides evidence to the contrary. It examines how the phenomenon impacts the analysis of personalized pricing, also known as perfect or first-degree price discrimination. Courts have long considered the practice efficient, and companies increasingly use big data to that end.
The paper reports the results of a sequence of experiments on a simple transaction: flatware purchases. When participants learned about a firm’s personalized-pricing mechanism, demand contracted by up to 24.8%. I model a company’s most profitable response to this behavior — namely, keeping consumers in the dark about personalization — and find that the ensuing demand-side inefficiency can dwarf that of uniform monopoly pricing.
Because personalized pricing has galvanized an industry of transparency-focused startups, I also model a company’s response when it cannot obscure its pricing mechanism. Its second-best strategy is to sell to a narrow range of high-value customers. Doing so excludes some lower-income or less-interested consumers from the market. This prompts a supply-side inefficiency that can also exceed that of uniform monopoly pricing.
Faithfully applying the consumer-welfare approach to these results suggests an expanded paradigm and new types of antitrust harms. Both strategies — opaqueness and exclusion — can lead to violations of the Sherman Act and facilitate showings of harm under the Robinson Patman Act. As such, this project supports policies aimed at the transparency of prices.
{"title":"Rethinking the Efficiency of Price Discrimination","authors":"Patrick Ward","doi":"10.2139/ssrn.3652696","DOIUrl":"https://doi.org/10.2139/ssrn.3652696","url":null,"abstract":"Analysis of efficiency in legal fields from contracts to competition assumes that a consumer’s demand depends on the price the consumer faces, not on the prices a firm charges other customers. This project provides evidence to the contrary. It examines how the phenomenon impacts the analysis of personalized pricing, also known as perfect or first-degree price discrimination. Courts have long considered the practice efficient, and companies increasingly use big data to that end.<br><br>The paper reports the results of a sequence of experiments on a simple transaction: flatware purchases. When participants learned about a firm’s personalized-pricing mechanism, demand contracted by up to 24.8%. I model a company’s most profitable response to this behavior — namely, keeping consumers in the dark about personalization — and find that the ensuing demand-side inefficiency can dwarf that of uniform monopoly pricing.<br><br>Because personalized pricing has galvanized an industry of transparency-focused startups, I also model a company’s response when it cannot obscure its pricing mechanism. Its second-best strategy is to sell to a narrow range of high-value customers. Doing so excludes some lower-income or less-interested consumers from the market. This prompts a supply-side inefficiency that can also exceed that of uniform monopoly pricing.<br><br>Faithfully applying the consumer-welfare approach to these results suggests an expanded paradigm and new types of antitrust harms. Both strategies — opaqueness and exclusion — can lead to violations of the Sherman Act and facilitate showings of harm under the Robinson Patman Act. As such, this project supports policies aimed at the transparency of prices.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114793516","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Airport regulations can take the form of cost-based, incentive, single-till and dual-till regulations. The present chapter highlights that no regulatory regime can solve all pricing and investment problems involved in airport operations at once when airports control prices in the areas of aeronautical and non-aeronautical businesses. A closer control of airport aeronautical charges favors the use of incentive and single-till regulations. Cost-based and dual-till regulations provide an environment good for investments and service quality. The lesson is that policy makers have to choose whether they would like to maintain a tight control on airport prices possibly at the expense of service quality or achieve high levels of service quality possibly leading to high pricing levels.
{"title":"Airport Regulation","authors":"Achim I. Czerny","doi":"10.2139/ssrn.3488237","DOIUrl":"https://doi.org/10.2139/ssrn.3488237","url":null,"abstract":"Airport regulations can take the form of cost-based, incentive, single-till and dual-till regulations. The present chapter highlights that no regulatory regime can solve all pricing and investment problems involved in airport operations at once when airports control prices in the areas of aeronautical and non-aeronautical businesses. A closer control of airport aeronautical charges favors the use of incentive and single-till regulations. Cost-based and dual-till regulations provide an environment good for investments and service quality. The lesson is that policy makers have to choose whether they would like to maintain a tight control on airport prices possibly at the expense of service quality or achieve high levels of service quality possibly leading to high pricing levels.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"58 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127905039","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This is the peer reviewed version of the following article: Cao, P., Wang, Y. and Xie, J. (2019), Priority Service Pricing with Heterogeneous Customers: Impact of Delay Cost Distribution. Prod Oper Manag, 28: 2854-2876., which has been published in final form at https://doi.org/10.1111/poms.13086. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
{"title":"Priority Service Pricing with Heterogeneous Customers: Impact of Delay Cost Distribution","authors":"P. Cao, Yaolei Wang, Jingui Xie","doi":"10.2139/ssrn.3084534","DOIUrl":"https://doi.org/10.2139/ssrn.3084534","url":null,"abstract":"This is the peer reviewed version of the following article: Cao, P., Wang, Y. and Xie, J. (2019), Priority Service Pricing with Heterogeneous Customers: Impact of Delay Cost Distribution. Prod Oper Manag, 28: 2854-2876., which has been published in final form at https://doi.org/10.1111/poms.13086. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123704761","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Zacharias G. Bragoudakis, Stavros Degiannakis, G. Filis
The aim of this study is to assess whether fuel prices in Greece respond asymmetrically to changes in the global oil prices. To do so, we depart from the current practice in the literature that focuses on fuel prices. Rather, we consider the mark-up of both the refineries and retailers. Even more, unlike the bulk of the existing literature, we take into consideration the whole supply chain, i.e. both the refineries and the retail fuel sector. Hence, we first assess whether the refineries’ mark-up responds asymmetrically to the global oil prices and subsequently whether the retailers’ mark-up shows an asymmetric behaviour relatively to changes in the refineries’ fuel prices. Our findings show that the Greek fuel retailers do not change their mark-up behaviour based on changes of the refined fuel price. By contrast, the asymmetric behaviour is evident in the refineries mark-up relatively to changes in the global oil prices, which is then passed through to the retailers and consumers. Finally, we convincingly show that weekly and monthly data mask any such asymmetric relationship. Thus, we maintain that unless the appropriate data frequency, fuel price transformations and the whole supply chain are considered, misleading findings could be revealed.
{"title":"Oil and Pump Prices: Is There Any Asymmetry in the Greek Oil Downstream Sector?","authors":"Zacharias G. Bragoudakis, Stavros Degiannakis, G. Filis","doi":"10.2139/ssrn.3444840","DOIUrl":"https://doi.org/10.2139/ssrn.3444840","url":null,"abstract":"The aim of this study is to assess whether fuel prices in Greece respond asymmetrically to changes in the global oil prices. To do so, we depart from the current practice in the literature that focuses on fuel prices. Rather, we consider the mark-up of both the refineries and retailers. Even more, unlike the bulk of the existing literature, we take into consideration the whole supply chain, i.e. both the refineries and the retail fuel sector. Hence, we first assess whether the refineries’ mark-up responds asymmetrically to the global oil prices and subsequently whether the retailers’ mark-up shows an asymmetric behaviour relatively to changes in the refineries’ fuel prices. Our findings show that the Greek fuel retailers do not change their mark-up behaviour based on changes of the refined fuel price. By contrast, the asymmetric behaviour is evident in the refineries mark-up relatively to changes in the global oil prices, which is then passed through to the retailers and consumers. Finally, we convincingly show that weekly and monthly data mask any such asymmetric relationship. Thus, we maintain that unless the appropriate data frequency, fuel price transformations and the whole supply chain are considered, misleading findings could be revealed.","PeriodicalId":321987,"journal":{"name":"ERN: Pricing (Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114460480","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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