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AbstractAbstract
[en] The effects of a price floor on price wars in the retail market for gasoline were analyzed. The authors selected a theoretical model which assumed a Bertrand oligopoly supergame, where firms initially collude by charging the monopolistic price. Once a deviation from this strategy is detected by the firms, a switch to a lower price is made in what can be called a punishment phase (price war), before returning to collusive prices. A natural experiment for the testing of the model was provided by the introduction of a price floor regulation in the Quebec retail market for gasoline in 1996. A Markov Switching Model with two latent states was used to simultaneously identify the periods of price-collusion/price war, and also to estimate the parameters which characterized each state. The results indicated that the intensity of price wars was reduced by the introduction of the price floor, but the expected duration of those wars was raised. 14 refs., 5 tabs., 1 fig
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Scientific Series; (no.2003s-57); Sep 2003; 30 p; Centre for Interuniversity Research and Analysis on Organizations; Montreal, PQ (Canada); ISSN 1198-8177;
; Available from the Centre for Interuniversity Research and Analysis on Organizations, 2020 University Street, 25th Floor, Montreal, Quebec H3A 2A5 or from the Internet at www.cirano.qc.ca/pdf/publication/2003s_57.pdf; Abstract in French and English are included

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