Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251471 
Authors: 
Year of Publication: 
2022
Series/Report no.: 
DICE Discussion Paper No. 386
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
Firms often sell a transparent base product and a valuable add-on product. If only some consumers are aware of the latter, the add-on's effect on the base product's price will be ambiguous. Cross-subsidization between products to bait uninformed consumers might lower, intrinsic utility from the add-on for informed consumers might raise the price. We study this trade-off in the gasoline market by exploiting an alcohol sales prohibition at stations as an exogenous shifter of add-on availability. Gasoline margins drop by 5% during the prohibition. The effect is mediated by shop variety and local competition. Implications for gasoline market definition arise.
Subjects: 
Off-Premise Alcohol Prohibition
Gasoline Market
Multi-Product Firms
JEL: 
L11
L91
R41
ISBN: 
978-3-86304-385-8
Document Type: 
Working Paper

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