Information and price dispersion: Theory and Evidence
- Author(s)
- Dieter Pennerstorfer, Philipp Schmidt-Dengler, Nicolas Schutz, Christoph Weiss, Biliana Yontcheva
- 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.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Universität Mannheim, Wirtschaftsuniversität Wien (WU), Johannes Kepler Universität Linz, Centre for Economic and Policy Research, Österreichisches Institut für Wirtschaftsforschung (WIFO)
- Journal
- International Economic Review
- Volume
- 61
- Pages
- 871-899
- No. of pages
- 29
- ISSN
- 0020-6598
- DOI
- https://doi.org/10.1111/iere.12443
- Publication date
- 01-2019
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502021 Microeconomics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucrisportal.univie.ac.at/en/publications/information-and-price-dispersion-theory-and-evidence(1758460e-3697-48d8-b2f4-2e10dfc549ed).html