Estimating Market Power in the Swiss Petrol Retailing Industry – A New Empirical Industrial Organisation Approach

Several competition authorities have accused petrol retailers of engaging in collusive conduct, which results in alleged “excessive” prices as well as simultaneous price setting across filling stations. However, petrol retailers must exert a substantial amount of market power if they are to dampen competition. Therefore, we propose a method within the spirit of the New-Empirical-Industrial-Organisation, which allows estimating market power held by petrol retailers in terms of a conduct parameter. Based on data for Switzerland, our empirical results suggest a low level of market power held by Swiss petrol retailers.