Price dispersion and consumer search : Evidence from the retail gasoline market and the supermarket industry in France.

Summary This thesis is an empirical work on price dispersion, i.e. the fact that an identical good can be sold at different prices, in violation of the famous law of one price. The approach is part of a literature initiated by Stigler (1961), who notes that "price dispersion is (.) the measure of ignorance in the market". The first chapter studies the impact of the creation of a low-cost retailer on the French fuel distribution market. The first chapter studies the impact of the creation of a low-price brand on the French fuel distribution market. This creation implies that many stations are confronted with a significant price cut by a close competitor. The aggregate reaction measured at the national level is small, but masks increases and decreases in equivalent proportions. The heterogeneity of the reactions highlights the important segmentation of the market. The second chapter, using the same dataset, examines the relevance of models that identify price dispersion at mixed strategy equilibria. Empirically, we observe that the order of prices of competing stations does indeed tend to vary over time, and that its volatility increases as the distance between outlets increases. Dispersion therefore increases with a search cost borne by consumers. In addition, the brand name of the stations largely determines their pricing strategy. Stations with the lowest prices are relatively more likely to maintain prices perfectly aligned with those of nearby competitors, while the dispersion measured between more expensive stations is positively correlated with the cost of diesel and the number of stations in the market. Thus, the results reinforce the view that a market close to Bertrand-style competition coexists with a less competitive market, where stations take advantage of significant frictions.The final chapter focuses on retail, drawing on data collected from an online price comparison service. I observe that the comparisons made between chain stores by the site are relatively uninformative given the heterogeneity of the results at the local level. Moreover, the sample of products selected can lead to widely different results. The volatility of comparisons increases with the distance between supermarkets, which, as in the case of fuel, indicates the presence of search costs. At the local level, the price level does not increase with concentration as proxied by market shares, which calls into question the relevance of this indicator for public policy. Dispersion is positively correlated with the price level, suggesting that imperfect information does indeed allow supermarkets to charge higher prices than in perfect competition.