The effects of government regulated price transparency on the retail gasoline market in Taiwan

This thesis studies possible outcomes of the government’s policy (increased price transparency) \nto the retail gasoline market. Chapter 2 investigates one of possible outcome of the government’s price policy on the retail price setting and provides new evidence of ‘hot air balloons and bricks’ that retail prices respond more quickly to decreases in costs but respond slowly to increases in costs. Chapters 3 and 4 discuss the government’s policy served as unilateral disclosure of the leading firm’s future price information to the supply and demands ides of the retail gasoline market, respectively. Chapter 3 presents empirical analyses of price leadership and perfect price alignment to explore the effect of an increased price transparency policy on the supply side. We propose evidence that the government’s policy is the underlying cause of price leadership and price coordination. Finally, using regional household-level data across 20 Taiwanese regions, Chapter 4 semiparametrically examines the effect of the government’s policy on the demand side. We find evidence of intertemporal substitution that the government’s policy helps to plan consumers’ future purchase. \n