Alcohol prohibition and pricing at the pump

Arbeitspapier

Firms often sell a transparent base product and a valuable add-on product. If only some consumers are aware of the latter, the add-on's effect on the base product's price will be ambiguous. Cross-subsidization between products to bait uninformed consumers might lower, intrinsic utility from the add-on for informed consumers might raise the price. We study this trade-off in the gasoline market by exploiting an alcohol sales prohibition at stations as an exogenous shifter of add-on availability. Gasoline margins drop by 5% during the prohibition. The effect is mediated by shop variety and local competition. Implications for gasoline market definition arise.

Object Details

• ISBN: 978-3-86304-385-8
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DICE Discussion Paper ; No. 386

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Transportation: General ; Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
• Subject: Off-Premise Alcohol Prohibition ; Gasoline Market ; Multi-Product Firms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fischer, Kai
• Event: Veröffentlichung
• (who): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (where): Düsseldorf
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/251471
• Last update: 10.03.2025, 11:45 AM CET