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.