Skip to content
Licensed Unlicensed Requires Authentication Published by De Gruyter Oldenbourg September 17, 2019

Price Gouging at the Pump? The Lerner Index and the German Fuel Market

Arne Neukirch and Thomas Wein ORCID logo
From the journal Review of Economics


Gasoline prices in Germany fluctuate significantly within one day. Price ranges of 15 euro cent per day are not uncommon. Consumers therefore often perceive that market power is exercised in the retail fuel market. Especially high surcharges in the late evening are considered to be price gouging. The German Federal Cartel Authority used these price mark-ups as evidence for oligopoly market power in four metropolitan regions between 2007 and 2010. Data for eight metropolises and 65 medium-sized cities from May 2016 to June 2019 show that the lowest price level in the day is reached in the early evening and then rises sharply. We use the well-known Lerner Index to measure market power in these evening hours. Our descriptive analysis shows that the Lerner Indices of the premium brands Aral, Shell, and Total S.A. rise after 10 p.m., that is, after a large part of the price-aggressive gas stations have closed. The results were about 0.1 for diesel and 0.08 for gasoline. Other companies achieve lower values of 0.05–0.07. Compared to other international studies that deal with the fuel market, we find a similar level of Lerner Indices, but only for few hours and not for the whole day. Multivariate estimations cannot show that a larger market share of the analyzed brand or a lower market share of price-aggressive firms increases the index. Influences of weekdays, different cities or wholesale prices cannot be proven either. Therefore, the gasoline market seems to be competitive, at least in a higher dimension as it is publicly perceived. Hence, pricing behavior in the evening and at night cannot be used as evidence of a serious abuse of market power by petrol stations, which could be relevant for the evaluation of future mergers in the petrol market.

JEL Classification: L13; L43; L91


Thank you to participants of the 5th “Verkehrsökonomik und -politik” conference in Berlin in June 2018 for their helpful comments.



Barron, J. M., B. A. Taylor and J. R. Umbeck (2004): Will Open Supply Lower Retail Gasoline Prices? Contemporary Economic Policy 22(1), 63–77.10.1093/cep/byh006Search in Google Scholar

Bundeskartellamt (2011): Sektoruntersuchung Kraftstoffe - Abschlussbericht gemäß § 32e GWB, Bonn.Search in Google Scholar

Bundeskartellamt (2015): Das 2. Jahr Markttransparenzstelle für Kraftstoffe (MTS-K), Bonn.Search in Google Scholar

Cairns, R. D. (1995): Reflections on Lerner’s Index of Monopoly Power, Review of Industrial Organization 10(1), 83–96.10.1007/BF01024261Search in Google Scholar

Clemenz, G. and K. Gugler (2006): Locational Choice and Price Competition: Some Empirical Results for the Austrian Retail Gasoline Market, Empirical Economics 31(2), 291–312.10.1007/978-3-7908-2070-6_12Search in Google Scholar

Coccorese, P. (2014): Estimating the Lerner Index for the Banking Industry: A Stochastic Frontier Approach, Applied Financial Economics 24(2), 73–88.10.1080/09603107.2013.866202Search in Google Scholar

Deodhar, S. Y. and I. M. Sheldon (1995): Is Foreign Trade (im)perfectly Competitive?: an Analysis of the German Market for Banana Imports, Journal of Agricultural Economics 46(3), 336–348.10.1111/j.1477-9552.1995.tb00780.xSearch in Google Scholar

Eckert, A. and D. S. West (2004): Retail Gasoline Price Cycles across Spatially Dispersed Gasoline Stations, The Journal of Law and Economics 47(1), 245–273.10.1086/380474Search in Google Scholar

Feinberg, R. M. (1980): The Lerner Index, Concentration, and the Measurement of Market Power, Southern Economic Journal 46(4), 1180.10.2307/1057252Search in Google Scholar

Giocoli, N. (2012): Who Invented the Lerner Index? Luigi Amoroso, the Dominant Firm Model, and the Measurement of Market Power, Review of Industrial Organization 41(3), 181–191.10.1007/s11151-012-9355-7Search in Google Scholar

Gischer, H., H. Müller and T. Richter (2015): How to Measure the Market Power of Banks in the Lending Business Accurately: A Segment-based Adjustment of the Lerner Index, Applied Economics 47(42), 4475–4483.10.1080/00036846.2015.1030570Search in Google Scholar

Golan, A., L. S. Karp and J. M. Perloff (2000): Estimating Coke’s and Pepsi’s Price and Advertising Strategies, Journal of Business & Economic Statistics 18(4), 398.10.1080/07350015.2000.10524880Search in Google Scholar

Gürsel, M. B. and O. Tölke (2017): Branchenstudie Tankstellenmarkt Deutschland 2016, Scope Ratings GmbH.Search in Google Scholar

Gürsel, M. B. and O. Tölke (2018): Branchenstudie Tankstellenmarkt Deutschland 2017, Scope Ratings GmbH.Search in Google Scholar

Haucap, J., U. Heimeshoff and M. Siekmann (2016): Selling Gasoline as a By-product: the Impact of Market Structure on Local Prices, Discussion paper/Düsseldorf Institute for Competition Economics, no. 240.Search in Google Scholar

Haucap, J., U. Heimeshoff and M. Siekmann (2017): Fuel Prices and Station Heterogeneity on Retail Gasoline Markets, The Energy Journal 38, 01.10.5547/01956574.38.6.jhauSearch in Google Scholar

Hosken, D. S., R. S. McMillan and C. T. Taylor (2008): Retail Gasoline Pricing: What Do We Know? International Journal of Industrial Organization 26(6), 1425–1436.10.1016/j.ijindorg.2008.02.003Search in Google Scholar

Kahai, S. K., D. L. Kaserman and J. W. Mayo (1996): Is the “Dominant Firm” Dominant? An Empirical Analysis of AT&T’s Market Power, The Journal of Law and Economics 39(2), 499–517.10.1086/467357Search in Google Scholar

Lerner, A. P. (1934): The Concept of Monopoly and the Measurement of Monopoly Power, The Review of Economic Studies 1(3), 157–175.10.2307/2967480Search in Google Scholar

Lewis, M. (2008): Price Dispersion and Competition with Differentiated Sellers, The Journal of Industrial Economics 56(3), 654–678.10.1111/j.1467-6451.2008.00348.xSearch in Google Scholar

Marktwächter (2018): Online-Handel: Das Spiel mit dem dynamischen Preis [Online]. (accessed August 17, 2018).Search in Google Scholar

Montgomery, W. D., R. A. Baron and M. K. Weisskopf (2007): Potential Effects of Proposed Price Gouging Legislation on the Cost and Severity of Gasoline Supply Interruptions, Journal of Competition Law and Economics 3(3), 357–397.10.1093/joclec/nhm011Search in Google Scholar

Neukirch, A. and T. Wein (2016): Das Auf und Ab der Tankstellenpreise – Die Rolle des Binnen- und Außenwettbewerbs, List Forum für Wirtschafts- und Finanzpolitik 42(2), 195–245.10.1007/s41025-016-0044-4Search in Google Scholar

Nguyen, M. and F. Steen (2018): Measuring Market Power in (April 13, 2018), NHH Dept. of Economics Discussion Paper 06/2018. Gasoline Retailing: A Market - or Station Phenomenon?10.2139/ssrn.3165384Search in Google Scholar

Ning, X. and R. Haining (2003): Spatial Pricing in Interdependent Markets: A Case Study of Petrol Retailing in Sheffield, Environment and Planning A 35(12), 2131–2159.10.1068/a3636Search in Google Scholar

Pennerstorfer, D. (2009): Spatial Price Competition in Retail Gasoline Markets: Evidence from Austria, The Annals of Regional Science 43(1), 133–158.10.1007/s00168-007-0206-7Search in Google Scholar

Saving, T. R. (1970): Concentration Ratios and the Degree of Monopoly, International Economic Review 11(1), 139.10.2307/2525343Search in Google Scholar

Slade, M. E. (1987): Interfirm Rivalry in a Repeated Game: An Empirical Test of Tacit Collusion, The Journal of Industrial Economics 35(4), 499.10.2307/2098585Search in Google Scholar

Snyder, J. (2009): What’s the Matter with Price Gouging? Business Ethics Quarterly 19(02), 275–293.10.5840/beq200919214Search in Google Scholar

Süddeutsche Zeitung (2018): Benzinpreise könnten steigen wie lange nicht mehr [Online]. (accessed August 14, 2018).Search in Google Scholar

U.S. D.O.J. Antitrust Division (May 20, 1994): U.S. v. Eastman Kodak Co. [Online].Search in Google Scholar

Wang, Z. (2009): Station Level Gasoline Demand in an Australian Market with Regular Price Cycles, Australian Journal of Agricultural and Resource Economics 53(4), 467–483.10.1111/j.1467-8489.2009.00468.xSearch in Google Scholar

Published Online: 2019-09-17
Published in Print: 2019-09-25

© 2019 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston

Scroll Up Arrow