|
|||||
|
|
INFORMATION AND PRICE DISPERSION: THEORY AND EVIDENCE |
|
| Authors: | Dieter Pennerstorfer Philipp Schmidt-Dengler Nicolas Schutz Christoph Weiss Biliana Yontcheva |
| Affiliation: | 1. Johannes Kepler University Linz, Austria;2. University of Vienna, Austria;3. University of Mannheim, Germany MaCCI, Germany CEPR, UK;4. Vienna University of Economics and Business, Austria;5. Vienna University of Economics and Business, Austria We thank the editor, three anonymous referees, Marcus Asplund, Tomaso Duso, Luisa Herbst, Saul Lach, Chao Ma, Jose L. Moraga-Gonzalez, Kathleen Nosal, Konrad Stahl, Matthijs Wildenbeest, and seminar participants at Carlo Alberto, CEU, CREST, DG Competition, DIW Berlin, DICE, Emory, Hebrew University, HSE Moscow, Johns Hopkins, Mannheim, St. Gallen, University of Queensland, Queensland University of Technology, Vienna University of Economics and Business, WIFO, Yale, the 2014 Winter Marketing-Economics Summit, the 2013 Winter Seminar of the Gesellschaft für Regionalforschung, DataLead 2015, EARIE 2014, EEA 2015, the CEPR Applied IO Workshop 2014, MaCCI Annual Meeting 2014, the MaCCI search workshop, the SFB-TR15 Mannheim meeting, and the 61st Annual North American Meeting of the Regional Science Association International for helpful comments. Weiss acknowledges support from Oesterreichische Nationalbank (Anniversary Fund, project number: 12974), Schmidt-Dengler from the Austrian Science Fund: P 30922. |
| Abstract: | Limited information is the key element generating price dispersion in models of homogeneous-goods markets. We show that the global relationship between information and price dispersion is an inverse-U shape. We test this mechanism for the retail gasoline market using a new measure of information based on commuter data from Austria. Commuters sample gasoline prices on their commuting route, providing us with spatial variation in the share of informed consumers. Our empirical estimates are in line with the theoretical predictions. We also quantify how information affects average prices paid and the distribution of surplus in the gasoline market. |
| Keywords: | |