Price Effects of the Austrian Fuel Price Fixing Act: A Synthetic Control Study

45 Pages Posted: 20 Jan 2021

See all articles by Maike Becker

Maike Becker

University of Hohenheim

Gregor Pfeifer

The University of Sydney

Karsten Schweikert

University of Hohenheim

Date Written: 2021

Abstract

Fuel prices are commonly perceived to be excessively high, which regularly triggers political discussions about fuel price regulations. Consumers demand stricter fuel price regulations to provide transparency about the current price level and to protect them from sudden price fluctuations. Such regulations are already in place in several countries, but whether they indeed help lower the overall fuel price level is unclear. In this paper, we study the effect of Austria’s Fuel Price Fixing Act on gasoline and diesel price levels. Using the synthetic control method, we construct a counterfactual and estimate Austria’s price trends in absence of the intervention. Our empirical results suggest, that immediately after the Fuel Price Fixing Act came into effect, gasoline prices are 23.4% lower than the synthetic control predicts. The effect on diesel prices appears to be less pronounced and amounts to 6.6% lower prices. Austria’s fuel price regulation seems to have been effective in terms of gasoline prices but may need further refinements to effectively tackle diesel prices as well.

JEL Classification: C220, D430, Q410

Suggested Citation

Becker, Maike and Pfeifer, Gregor and Schweikert, Karsten, Price Effects of the Austrian Fuel Price Fixing Act: A Synthetic Control Study (2021). CESifo Working Paper No. 8819, Available at SSRN: https://ssrn.com/abstract=3767691 or http://dx.doi.org/10.2139/ssrn.3767691

Maike Becker (Contact Author)

University of Hohenheim ( email )

Fruwirthstr. 48
Stuttgart, 70599
Germany

Gregor Pfeifer

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

Karsten Schweikert

University of Hohenheim ( email )

Schloss 1C
Stuttgart, 70593
Germany

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