A visiting competition expert says regulating petrol prices does not work, and that international attention is now turning to the role refineries play in the industry.
Justus Haucap, who holds the chair of competition theory and policy at the University of Dusseldorf in Germany, told a seminar in Wellington of an economic laboratory experiment he was involved with to shed light on the issue.
The experiment tested the Austrian, Luxembourg and Western Australian regulation regimes.
In Austria, the price of petrol can only be increased in the morning but cuts are always possible. In Luxembourg, margins are regulated, and in Western Australia only one price change is allowed per day.
"The Austrian and Luxembourg pricing rules actually tend to increase the profit of the operating companies," he said.
The Western Australian regime did not do any harm but also didn't provide any benefit.
"We got an uneasy feeling about implementing the Austrian rule in the German market after this result, even though it is only experimental evidence," he said.
He said care had to be taken in making policy conclusions from economic laboratory experiments.
But the broad policy conclusion was that pricing rules would not solve the problem of competition in petrol price-setting.
The German cartel authority had now turned its attention to the wholesale market which supplied petrol stations. There were "quite funny stories" that suggested the use of market power, including by refineries, he said.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Gareth Morgan wades into Awaroa beach
- MARKET CLOSE: NZ shares join global selloff; Xero, Orion, ANZ decline
- Apple NZ boosts 2015 earnings while deferring $8.3m in tax against future profits
- Appointments release from Airways New Zealand
- International bank Investec buys into local crowd funder Equitise
Most listened to
- Christchurch Chamber of Commerce CEO Peter Townsend on workers re-entering the city's CBD
- Morningstar's David Mueller on JB Hi-Fi's latest New Zealand revenue
- Rob Hosking discusses what John Key needs to do to shut down critics
- MYOB's CEO Tim Reed and executive James Scollay talk about growth and competition
- Nevil Gibson discusses Amazon's expansion into bookstores in his latest Editor's Insight