The Heterogeneous Effects of Entry on Prices

Kai Fischer; Simon Martin; Philipp Schmidt-Dengler

doi:10.1093/jeea/jvaf061

The Heterogeneous Effects of Entry on Prices

Department of Economics

Publications: Contribution to journal › Article › Peer Reviewed

Abstract

We study the effect of entry on the price distribution in the German retail gasoline market. Exploiting several hundred entries over five years in an event study design, we find that entry causes a persistent first-order stochastic shift in the price distribution for at least three years after entry. Prices at the top of the distribution change moderately or not at all, but prices at the left tail decrease by up to 139 of stations’ gross margins after entry within a 1 km (2 km) radius. The value of information (VOI) increases by 2915 in 1 km (2 km) markets, suggesting larger savings for consumers with easy access to information.

Original language	English
Pages (from-to)	1-45
Journal	Journal of the European Economic Association
DOIs	https://doi.org/10.1093/jeea/jvaf061
Publication status	Published - 26 Dec 2025

Austrian Fields of Science 2012

502013 Industrial economics

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10.1093/jeea/jvaf061

https://doi.org/10.1093/jeea/jvaf061

Cite this

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title = "The Heterogeneous Effects of Entry on Prices",

abstract = "We study the effect of entry on the price distribution in the German retail gasoline market. Exploiting several hundred entries over five years in an event study design, we find that entry causes a persistent first-order stochastic shift in the price distribution for at least three years after entry. Prices at the top of the distribution change moderately or not at all, but prices at the left tail decrease by up to 139 of stations{\textquoteright} gross margins after entry within a 1 km (2 km) radius. The value of information (VOI) increases by 2915 in 1 km (2 km) markets, suggesting larger savings for consumers with easy access to information.",

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