How Have COVID-19 Case Rates Impacted Retail Gasoline Price Markups? Evidence From Daily Prices and Transportation Choices

ABSTRACT

Retail gasoline sales generally take place in an incredibly competitive environment with highly visible prices, many competitors, and homogeneous goods. Here, we show how price–cost margins have changed in an era of drastic changes to transportation choices. We find that increasing COVID-19 case rates have increased firms' market power in the retail gasoline sector, effectively halving the station-level price elasticity of demand. © 2022, Asia-Pacific Applied Economics Association. All rights reserved.