Rebranding in the French Gasoline Market: Local Competitive Effects of Price Decreases

Résumé 0

Between 2011 and 2014, an oil company developed a discount strategy by creating a new brand for its network of gas stations, with a price cut of 10 euro cents per liter. Using the weekly diesel prices of thousands of retailers and a difference-in-differences method, we highlight the weakness of the aggregated price response – less than one euro cent – by close competitors. This conceals increases and decreases in equivalent proportions for the 40% of stations that reacted by over one cent. The decreases were mainly implemented by supermarket retail stations, whereas the stations of oil groups and independent companies were responsible for the increases. These reactions highlight important market segmentation, beyond the apparent homogeneity of the product.Classification JEL : C20, C55, L81.