Price Leadership and Uncertainty About Future Costs

Jorge Lemus, Fernando Luco

Research output: Contribution to journalArticlepeer-review


Does uncertainty about future wholesale prices facilitate coordination among firms? To address this question, we exploit a policy intervention (Mepco) that limited the week-to-week variation in wholesale prices in the Chilean retail gasoline industry. We show that Mepco caused a decrease in retail gasoline margins in Chile. Further, using price leadership intensity as a proxy for the strength of market coordination, we show that margins decreased more in markets with higher leadership intensity. We rationalize these findings through a repeated-game framework.

Original languageEnglish (US)
Pages (from-to)305-337
Number of pages33
JournalJournal of Industrial Economics
Issue number2
StatePublished - Jun 2021

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)
  • Economics and Econometrics


Dive into the research topics of 'Price Leadership and Uncertainty About Future Costs'. Together they form a unique fingerprint.

Cite this