Genakos, C., "Competition & Pass-through: Lessons from the Greek Islands"

Thursday, December 07, 2023

Title:  "Competition & Pass-through: Lessons from the Greek Islands"

Speaker: Professor Christos Genakos, University of Cambridge

Host: Assistant Professor Efthymios Athanasiou, Department of Economics, Athens University of Economics and Business

Time: 15.30 -17.00

Room: A36

Abstract: A fundamental issue in economics is how firms pass cost shocks (taxes, exchange rates, input prices) through to prices. Theoretical analysis shows that competition is a key determinant of pass-through. However, in existing empirical studies competition is generally measured by the number of competitors located within a given geographical area around each firm. This arbitrary geographical market definition ignores the market structure endogeneity. We measure how pass-through varies with competition in isolated oligopolistic markets with captive consumers. Using daily pricing data from gas stations on small Greek islands, we study how unanticipated and exogenous changes (increases and decreases) in excise duties and VAT rates are passed through to consumers in markets with different numbers of retailers.