Working Paper: CEPR ID: DP10243
Authors: Christos Genakos; Pantelis Koutroumpis; Mario Pagliero
Abstract: We study the repeal of a regulation that imposed maximum wholesale and retail markups for all but five fresh fruits and vegetables. We compare the prices of products affected by regulation before and after the policy change and use the unregulated products as a control group. We find that abolishing regulation led to a significant decrease in both retail and wholesale prices. However, markup regulation affected wholesalers directly and retailers only indirectly. The results are consistent with markup ceilings providing a focal point for collusion among wholesalers.
Keywords: markup regulation; markups; policy evaluation
JEL Codes: L0; L1; L4; L5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Collusion among wholesalers (L42) | Higher prices (D49) |
| Deregulation (L51) | Dissipation of collusion among wholesalers (L42) |
| Deregulation (L51) | Decrease in average retail prices (D49) |
| Decrease in wholesale prices (E31) | Decrease in average retail prices (D49) |
| Deregulation (L51) | Decrease in wholesale prices (E31) |